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Lasting power of attorney vs. executors - avoid the ‘Chicken and Egg’ situation.

Following on from our article ‘Securing your family’s financial future.’ in our last issue, this quarter we focus on immediate tasks in hand following a death.

Lasting power of attorney doesn’t exist indefinitely 

There is a broad misconception that where a Lasting Power of Attorney (LPA) is in place this continues after death with the individual holding the LPA still having access to the deceased person’s bank accounts, among other responsibilities. This is not the case. An LPA ends on death, at which point the responsibility of administering the estate passes to the executors. The role of the executor is a completely separate one; it makes no difference if the person holding the LPA is also the executor.

What executors should consider 

There maybe problems when it comes to paying the inheritance tax liability, as this needs to be settled before an application for probate can be made. Executors can apply to use HMRC’s ‘direct payment scheme’, which allows funds to be released from the deceased’s bank account to HMRC. However, if there is a shortfall it puts the executors in a position of either having to use their own funds to settle the liabilities or apply for a bank loan. For help to navigate this pitfall, or avoid it in the first place, please get in touch.

 

Looking for more information?

If you have a query about any of the topics mentioned in this article, please fill in the form below and one of our experts will be in touch.

 

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