I am acting in the administration of the estate of a deceased person who had a number of companies, and was also the partner in one partnership with his girlfriend. The companies were all held in various percentages.
The deceased made lots of gifts in his lifetime which I am required to account for on IHT400, and seemingly a number of these appear to be to and from his Company Bank Account and Partnership Account.
I have checked and where the company is deemed to be a separate legal entity, any gifts to the company are PETs from the deceased. This seems quite straightforward given the corporate veil. However, if so, are these PETS reduced by the value of his shareholding? Or where the company is deemed to be a legal entity, is this a PET on 100% of its value regardless of the deceased’s shareholding in the companies? Presumably the answer here is yes, unless the “gift” is actually a directors loan.
Also any gifts to the partnership presumably are PETS too. However where there is no corporate veil, would you pro rata each gift by 50% given he was a 50% shareholder? Again, some of these (or all) may be deemed to be a ‘loan’ but I am yet to clarify this with the accountant.
My next question, and the main question then, is in respect of gifts from the company. The deceased used the Partnership account, and one of his companies to pay his son’s divorce solicitor fees and may have made other gifts too such as paying his grandchildren’s’ university fees. I can see transactions from his joint account to his company saying “XXX university Fees” whereby obviously the company account will have then paid the fees. Although the corporate veil applies, surely these are still PETS? In which case, would the PETs be pro rated based on the parties respective shareholdings?
Naturally these gifts never should have been made this way. Do I have any obligation here? I can’t see that I do as there is no money laundering as such, but I thought I would check as clearly the funds have not been managed properly.
Lastly, the accountant has told me that a lot of Directors Loans are owing back to the deceased… in which case presumably I need to run through the “PETs” with the Accountant and work out what are loans and what are PETs to the company…
All bit of a mess really and I just wondered if anyone else had come across something like this and what they did? Any guidance from other practitioners would be very welcome as the deceased has died with an awful lot of transaction that will be caught by the 7 year rule and I am not sure quite how I can account for all this