Duty of care re failed PET

Solicitors acting for executor complete iht 400, including reference to large lifetime gifts, which were made less than 7 years before death, to persons who were not beneficiaries under the Will. The failed PETs triggered a substantial iht liability due on them.

Do the solicitors acting for the executor owe a duty of care to the donee of the PET to inform him of the iht liability and the need to pay it within 6 months of death to avoid interest?

Simon Northcott

1 Like

I do not see how any duty could arise but it is of course in the executors’ interest to tell them as any tax unpaid after 12 months becomes their liability as well.

Andrew Goodman
Osborne Clarke LLP

Am I not right in thinking that if the transferee does not pay the IHT, HMRC has eventual recourse against the personal representatives? So, irrespective of a duty of care, does it not make sense to encourage the transferee to pay promptly?

Taurean Drayak
Elliot, Bond & Banbury

It is surely in the interest of the executors that the donee(s) of failed PETs are made aware of their liability and provide for payment in good time, so that HMRC do not have occasion to try and claim it from the executors. Normally I would expect the solicitors would inform them, in their clients interest.

But I can’t see on what basis the solicitors have a duty of care to inform the donees, who are neither clients nor beneficiaries of the estate.

Tim Gibbons

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Interesting, Simon.

I do not see how the prs could have any duty to the donees. Their duty is to administer the estate properly, and they owe that duty to those interested in the Estate.

But it might, i suppose, be said that they owe a duty to the Estate beneficiaries to bring the liability to the attention of the donees, so that interest does not accrue which the Estate may have to pay.

Tom Dumont
Radcliffe Chambers