Deceased made Will in UK leaving estate equally between her children. She was domiciled in UK but had assets in another european jurisdiction.
Independent administrator was appointed by Court as the children/executors couldn’t get on.
The extent of the foreign estate has been reported to HMRC for IHT purposes and tax paid on that basis. However, the administrator’s view is that she doesn’t have any authority to deal with the foreign estate.
One of the children has been dealing with the foreign estate and has incurred various expenses and wants to be reimbursed from the UK estate.
The Will is silent as to the specific payment of foreign taxes, expenses etc but has standard wording for payment of debts, taxes, testamentary expenses etc without limiting them to UK liabilities.
Is there any authority for a UK administrator to pay foreign estate admnistration expenses given the foreign assets do not come under her control? I should add that the foreign assets are all immovables.
I believe s173 IHTA 1984 exists because the legislators envisaged that PRs might incur administration expenses abroad, but there is – as far as I am aware – no
obligation for the PRs to pay such expenses.
Having said that, the administrator has ‘no authority to deal with the foreign estate’? Was the Will limited to England & Wales? If not, then English law considers
them PRs for the worldwide estate. There may well be practical issues for the PR to have her standing recognised in other jurisdictions, but the English court would consider her responsible for taking the necessary steps to deal with assets abroad.
Why has this been done by the beneficiary?
What is the law applicable to the succession of the foreign assets? If they vest directly in the beneficiaries, it is hard to see how expenses can be attributable
to the estate.
Once probate has been obtained the PRs are responsible for dealing with UK and foreign assets to the extent possible and permitted by the law of the country in which the asset is situated. The PRs must in carrying out their duties do so in the best interest of the estate.
Generally speaking, PRs cannot delegate their powers. Short of specific provision in the will it would seem that allowing a beneficiary to undertake administering etc any foreign assets is not acceptable and as a consequence any expenses incurred by such beneficiary may not therefore be rightly reclaimable from the PRs.
Claiming foreign expenses under s 173 can sometimes be arduous. In particular, HMRC appear to take the view that only “additional” expenses are deductible ie only those expenses which have been incurred above those which would have been incurred had the property been in the UK (subject to a 5% cap). I’ve never been convinced that this is a correct interpretation of the section. If HMRC are aware that any expenses have been incurred by a beneficiary and not the PRs a deduction seems unlikely.
7 April 2020.
Dear Samir,
It seems that the answers so far have not addressed the issue with regard to the foreign assets, namely that they are immovables. As such it is the law of the country where the immovable is situated that will apply. This may mean dealing with the immovable by a local Notarial Act, (or perhaps by a local Grant using the UK Grant as a basis for the foreign Grant) . There may also be Forced Heirship issues to consider as regards the foreign immovables.
You also need to consider whether or not Brussels IV applies to the UK Will and its recognition in the overseas foreign country as regards the persons to whom the immovables are to be transferred. Obviously consulting a lawyer based in the foreign jurisdiction near to where the immovable is situated is required.
As for the foreign expenses incurred by the child concerned, surely these in the interests of fairness and justice should be reimbursed provided that such expenses are reasonable and have been legitimately incurred in good faith, and irrespective of whether or not they can be deducted for UK tax purposes. I note the Administrator has been appointed by the Court, so if the estate can justify it, an application could be made to the court for approval so that the Administrator can make such reimbursements.
Peter Double
Probate Resealing Services Ltd
The Representative is right to say that she has no power over a foreign immovable which is outside the jurisdiction of the English Court. How can she? She cannot go beyond the real jurisdiction of the English Court which has appointed her. There are ways through this using a combination of the EU succession regulation and the English common law from a unitary perspective which were outlined in a previous thread.
If the immovable is in France, give me a call if you wish, I am currently handling cases requiring a practical approach, but not as to costs, which seem to be your main concern.