Investigating lifetime gifts

I am dealing with the executors of an estate where the deceased had a history of making lifetime gifts. Upon investigating bank and investment statements there appear to have been significant transfers and cheque payments made in the seven years prior to death. The beneficiaries initially denied receiving any gifts but on further questioning have now accepted that some gifts were made. They continue to deny that further gifts were made despite evidence of multiple transfers. Their explanations are broadly that the transfers were reimbursement for expenses paid on behalf of the deceased but they have produced no evidence of the expenses incurred.

How would others approach this situation? If the executors ask the question about a transaction and a denial is received have the executors carried out their duty? Should they consider forwarding copies of seven years statements to HMRC with the IHT forms with a explanation as to the investigations we have carried out. Has anyone had this situation previously and how did they deal with it?

Paul Lowery

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If the personal representative is not satisfied with the answers received, they cannot “reasonably” accept that there was no element of gift. They have a duty to make further enquiries.

If the amounts transferred are said to have been the repayment of expenses, the recipient should be asked to explain what the “expense” incurred was for. In that light, does the amount in question look reasonable? It is possible that the recipient will have sent the deceased their receipts and, once the monies were reimbursed, why would the deceased have needed to keep the paperwork?

I suspect that merely sharing copies of the bank statement with HMRC could result in a general enquiry, seeking information in relation to all payments over, say, £1,000 or £5,000.

If the recipients of payments are unwilling to provide further information, they will need to understand that unless the PR can be satisfied that the payment can properly be identified as a refund of expenses properly incurred on behalf of the deceased, they will need to be disclosed to HMRC. Whilst the recipients might not take kindly to this, they may recognise that it is in their interests to co-operate.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals