Distributing assets before probate

[Inheritancequestions]

My sister and I are executors and sole beneficiaries for my dad's will. His estate consists of a house and various investments / bank accounts.

Some of the investments / bank accounts are below the company's threshold for probate so we're likely to be able to close them before probate.

Can we distribute the money from those between us now or do we need to keep them separately as "estate funds" until we get probate and then share it out? I appreciate that we will need to declare the info on the inheritance tax forms irrespective of when we actually distribute the funds.

I can't see any reason why we wouldn't get probate granted as sister and I are both in agreement, the will is really clear and there isn't any other close family, so there's no-one who is likely to challenge the will.

Is there going to be IHT to pay?

IANAL. I wouldn't distribute before probate if there was any chance of IHT.

Yes, we will need to pay IHT. Thanks.

Was your DF in receipt of any benefits which may need to be reviewed and perhaps repaid to the DWP?
If at all possible, I'd hold off distributing the estate until all clear. I read somewhere that it's wise to refer to an 'executor's year' (supposedly a year after probate has been granted) before thinking about distribution, but in MiL's case, we were contacted by the DWP 13 months after probate had been granted (big backlog), and we've been informed it could be 12 months before they review our executors' account. So tread carefully.

I definitely wouldn't distribute before any IHT is paid.

Our solicitor distributed some funds that had been collected, before probate was granted, I don't know if being a solicitor made that possible or if any executor could. Obviously strict records were kept and it was all taken into account in the final distribution after probate was granted.

There is no legal bar to distributing the estate before probate is granted. However, you risk leaving yourselves personally liable if there isn't enough left in the estate to cover IHT and all the deceased's debts.

Thanks for all those replies.

Presumably the same would apply to the proceeds from selling the car - hang onto the funds until we've paid IHT?

I'm about to set up a joint account for my sister & me to store any funds we receive prior to probate.

With the investments there may be tax to pay on the estate if the investments increase in value as well as tax on any building society interest received. There will still be costs to cover on his house, insurance, utilities (hopefully no council tax) funds to cover the legal fees for selling the property though this will come out the sale proceeds.
We are 15 months post fil death. Probate granted in April IHT paid in February and still not ready to distribute. The house has sold and the beneficiary who was left the house has got the proceeds of the sale but still more expenses to go.

You might be able to distribute some funds but keep some back for the unexpected costs.

Yes. Just hold back. Frustrating but it's better to hold back than give away too soon.

When you get probate it means that the executors have fulfilled their obligations to the Inland Revenue and can proceed with fulfilling the remaining will of the deceased and distribute funds.
Have you registered the death with the various organisations? When the death certificate is registered they usually freeze the monies until they either 1) receive a certified probate with you as named executors along with proof of your identity or 2) you need what is called a small estates declaration where the executors declare that the estate is under the IHT band. This doesn't apply here. I'm kind of surprised they say that they are too small to meet the threshold to move.

In any case, I wouldn't distribute anything until you've discharged your legal requirements to the Inland Revenue.

We did, but there was no IHT to pay.

Only one bank wanted the probate certificate - the other financial institutions (including the DWP!) just paid direct to one of us and we divided it immediately and well before probate was granted.

Are either of you in financial hardship?

This is not correct. When you get the grant of probate it means you can legally start to dispose of the estate.
You only know how much you have to pay in IHT once you have liquidated all the assets.

I'm in the process of notifying the various companies. Yes, the small estates declaration won't apply to us. One bank I spoke to today said that they will close the account & release funds without probate if the account has less than £50,000, which it does in our case.

I think I recall reading on MN about a case where one of the executors went and collected the money from smaller sized accounts and made off with it before the others knew what was going on!

Not exactly, but my life would be an awful lot easier if we could distribute a small amount (<1% of the estate) before we get probate. My dad regularly paid for things for me that I will struggle without between now & probate.

There is nothing wrong with doing that at all - as long as it is all properly recorded.

The issue would be if you distributed a relatively large amount and then afterwards found out that the estate had some large debts that needed to be paid off in addition to the IHT and there wasn't enough money left over to pay these debts.

In that situation you would be personally responsible (as the executors) to repay any of that money.

start to dispose of non liquid assets and putting the money into a shared account sounds sensible (assuming you get along and trust each other) especially things depreciating or costing money eg car. It’s fine to clear property of items with no intrinsic value eg clothes, most crockery, actually most things especially to declutter ready to stage to sell, then arrange the photos and valuation so it can be listed as soon as you feel probate on its way (doesn’t need to be actually granted at listing but will need to be for completion!) selling isn’t quick so definitely move things along, houses unsold cost money. Oh and ensure that the house insurance knows it’s empty pending probate, they are used to this.

sorry for your loss. My biggest advice is to keep meticulous accounts, every receipt, everything down to the last stamp, may seem effort but helps in the long run