Bequest from separated former husband only partly paid

Q&A: Dominic Coyle answers your personal finance questions

There is no tax liability on any bequest to you from your former husband, so there are no legal grounds that I can see for your husband’s solicitor withholding 15 per cent of the bequest to cover tax

There is no tax liability on any bequest to you from your former husband, so there are no legal grounds that I can see for your husband’s solicitor withholding 15 per cent of the bequest to cover tax

 

My husband and I were separated 15 years ago. He passed away, in 2016. He kindly left me a small bequest in his will.

My solicitor gave me all but 15 per cent . He said my husband’s solicitor has that to cover tax etc. I have made inquiries with Revenue, who told me as his spouse I’m not subject to tax. How do I stand three years later?

Ms A.R. email

I’m not sure what your former husband’s solicitor is up to – or why your own solicitor did not call him out on it when the bequest was first transferred to you.

The only issue in my mind when I first saw your letter was whether there would be any difference in your position if you had had a formal judicial separation or simply an informal “Irish” one. You didn’t say in your note.

But, as it happens, it’s irrelevant anyway.

According to Revenue, with whom I also checked the position, “any benefits passing between separated spouses or between separated civil partners, whether that separation is informal or judicial, are exempt from CAT (capital acquisitions tax) under the spousal exemption”.

If you had been divorced the position could be different but for separated people it is, in Revenue’s eyes, crystal clear.

To put it plainly, there is no tax liability on any bequest to you from your former husband, so there are no legal grounds that I can see for your husband’s solicitor withholding 15 per cent of the bequest to cover tax.

As both you and I have been able to clarify this with a single communication with Revenue, it is a little difficult to understand why a legal professional and/or their support staff could not get similar clarification and act in accordance with it. It’s not as though separation is that rare an event in inheritances cases in Ireland any more.

Legal responsibilities

This is especially so as your husband’s solicitor, presuming they are an executor to his will, have specific legal responsibilities. And an executor can be held financially accountable personally for any failure to properly execute a will on a person’s estate – forever. Their responsibility is not time defined.

The only circumstance in which I can see any reason not to pass on the full bequest is where there is not enough in assets in the estate to meet all the specific bequests made in your husband’s will – but that is not what your solicitor said, and they would be very specific about that sort of thing.

All of this is very unfortunate and takes away some of the good of what was, as you note, a kind gesture by your former husband. I’d get on to your solicitor straight away and, after you’ve ticked them off for not knowing the law on this, get them to pursue it actively and urgently with your husband’s former solicitor.

And remember, as I say, if the estate has been fully disbursed without your missing 15 per cent being paid to you, that is a financial liability on the executor. You may, unfortunately, have to take a case to secure it, together with any legal costs involved. But, given that legal costs would likely dwarf the sum involved, you’d hope the executor would see sense.

I wouldn’t delay on this. As a rule, executors have a year from the date of death to organise the deceased’s affairs without threat of legal action. But where I am not clear is if there is a time limit thereafter for beneficiaries to lodge legal claim against the executor. Certain sources suggest there is a six-year window from the date of death but I’m not certain. Hopefully, your solicitor will advise.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice

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