I am currently instructed by the Executors of the Estate of W. W’s husband has been charged with the murder of W and is currently in prison on remand awaiting trial. W’s husband is one of the Executors but has accepted through his solicitor that we will apply for Probate with power reserved. I am instructed by the remaining executors. I understand that we will not be able to distribute the estate until we have a verdict from the trial.
In the meantime though we need to obtain a Grant of Probate to allow us to pay liabilities of the estate and to safeguard the assets until we know who the beneficiaries will be. We have also been informed by another solicitor that they hold information we need to know to administer the estate but are not willing to release the information until we have a Grant.
W’s estate is in excess of £650,000 so if spouse is not the main beneficiary then the estate will be taxable.
How would you deal with this when applying for the Grant of Probate? I am minded to submit the Inheritance tax return with a claim for spouse exemption and a detailed explanation of the circumstances. In my view the husband is currently the main beneficiary as he is ‘innocent until proven guilty’ and the forfeiture rule only applies after a guilty verdict.
Upon a guilty verdict we would then have to go back to the Revenue and let them know of the change of circumstances and pay any tax due.
Is this the correct way to deal with this? Or would it be better to pay the potential tax due and claim it back in the event he is not convicted?
Would be very grateful for anyone’s experience in this area as it is a new one to me.
I am sure every reader wishes you well in your key role in the aftermath of such tragic circumstances. That W’s widower has accepted having power reserved to him seems a positive first step on a long and difficult journey for your clients.
Their duties are to pursue the due administration of the estate. If not already underway, you should encourage independent advice being taken by or for the potential beneficiaries through forfeiture.
For now your innocent until proven guilty view is very sound. There is no present trigger to presume a forfeiture outcome. It is the duty of the executors to claim the available spouse exemption. They should equally disclose the factual existence of the murder charge to HMRC and note the possibility of the widower’s entitlement becoming forfeited.
A final conviction for murder may confirm such an outcome. A final conviction for other categories of unlawful killing may also pressage such an outcome. However, application can be made for relief from forfeiture arising from unlawful killing other than murder.
An acquittal would point away from forfeiture. Or there may be no criminal trial if, for example, W’s widower were to predecease such an event. As you will appreciate, any inquest will be held over pending any criminal trial. Civil proceedings may follow with a “balance of probabilities” standard of proof sufficient.
In Challen v Challen & Anor [2020] EWHC, where a murder conviction of the widow was quashed many years later, forfeiture was overturned. The application for this, under the Forfeiture Act 1982, was not prompted by any desire to change the destination of the forfeited inheritance away from the children who had benefitted as a result of the forfeiture. The motivation appears rather to have included a desire to secure a belated spouse exemption. Even if the continued benefit from the original forfeiture of the estate by the children of the widow and the deceased is presumed to have occasioned a PET by the widow.
The executors’ role should be limited to returning according to current circumstances (eg by Corrective Account), planning for potential changes and keeping HMRC informed of developments and, if required, of any notified proceedings.
I have a similar sad case except the husband is given only an IPDI under the Will.
2 years will have passed in January 2024 and still the husband has not been told whether he is to be charged. On the basis of innocent until proved guilty, does the forum think the Trust already exists and that spouse exemption applies and, if forfeiture is subsequently applied, whether that goes back to the date of death or if it will effect a PET by the husband?
Whilst it is many years, I think as many as 45, since I’ve dealt with a forfeiture case, I would think that in your case it would apply back to the date of death as it would appear inequitable if it resulted in there being a PET created.
What would concern me in such situations is that having claimed spouse relief at the outset and some years later losing it if forfeiture is applied, an estate which becomes liable to IHT will have to pay 7.5% interest on top! Surely a case for HMRC to exercise discretion?
Looking at the initial posting, I wonder if the husband denies murder but, in his defence, alleges manslaughter?
If he does then I understand forfeiture will apply unless he can show his wife’s death resulted from his self-defence or he lacked sanity at the time. In either of these cases, I believe an application under the Forfeiture Act would be required.
If the husband did not actually murder his wife, but was complicit in her death, forfeiture may still apply.
In essence, the question is fact specific and, as suggested by Patrick, there might be benefit in paying IHT now (perhaps lodging a deposit and explaining to HMR why this is being done) so as to avoid the potential for interest and penalties.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals