If it's taking a long time to get an inheritance, you might wonder if there any circumstances where an executor of a will can withhold money from a beneficiary in the UK?
The short answer to this is: it depends.
While it may be frustrating for beneficiaries, an executor of a will has to follow the probate process when they handle the estate of a deceased person. A part of this process is, of course, distributing assets to beneficiaries. But there are other steps they must follow, including paying off debts and dealing with disputes if they arise.
Because of this, there may be some circumstances where a beneficiary must withhold money or assets from beneficiaries. But there are certain rules that say when and how they can do this in line with the law. For example, they can’t withhold money or assets from a beneficiary for their own gain.
In this article, we will explore if an executor can withhold money from a beneficiary, the circumstances in which they can, and what beneficiaries can do if they feel money or assets are being withheld by an executor for no good reason.
Can an executor withhold money from a beneficiary?
An executor of a will in the UK can withhold money from a beneficiary in some circumstances. This is known as ‘reserving funds’ and there are a variety of reasons when it might be okay such as:
They need to pay off debts or liabilities of the deceased;
Money and assets are to be held in trust until beneficiaries reach a certain age;
They have to pay inheritance tax on the estate.
If an executor thinks it’s appropriate to withhold money or assets for the above reasons, they should be able to prove this with supporting evidence, like documents or legal advice from a probate solicitor.
However, an executor of a will can’t withhold money from beneficiaries without good reason or for their own gain. If they do refuse to pay a beneficiary in these circumstances, they may be liable for the beneficiary's loss.
With this in mind, it’s important for executors to carefully consider whether it would be right, morally or legally, to withhold money from a beneficiary.
In most circumstances it’s a good idea to get legal advice, too, so as to avoid legal claims being brought against them by beneficiaries later on.
When can an executor withhold money from a beneficiary?
Now we know that an executor can withhold money from a beneficiary, let’s take a deeper dive into the specific circumstances where this may be okay.
When paying the deceased's debts
If someone leaves debt behind in their name when they die, these debts become a liability on the estate.
The executor of the estate has to pay those outstanding debts from the estate before money or assets can be given to beneficiaries as per the will.
If they don’t, the executor could become liable for the debt.
In these situations, withholding distributions to beneficiaries may be necessary to ensure all debts have been paid.
If money or assets are held in trust
Trusts are often used to provide for children or vulnerable loved ones.
When money or assets are held in trust, they are managed by an appointed trustee until a certain point. For example, until a child turns 18 or 21.
Often, executors named in wills are appointed as trustees too. If this is the case, an executor is responsible for managing the trust for the benefit of the beneficiaries for the duration of the trust.
In these cases, the executor can withhold money from beneficiaries for however long the trust lasts, providing it is in the best interest of the beneficiaries.
In the event of contentious probate
Probate disputes, sometimes referred to as contentious probate, can also slow down the process of distributing assets and money to beneficiaries.
For example, a person might claim a will is invalid, therefore money and assets shouldn’t be distributed as per the will until the validity of the will is verified.
Alternatively, someone may make a claim for financial provision under the Inheritance (Provision for Family and Dependants) Act 1975. In these claims, a person is asking the court to vary the terms of the distribution of an estate, which could slow down the process and mean the executor needs to withhold funds until the matter is ruled on.
Another common reason for withholding money or assets from a beneficiary is when creditors make a claim against an estate.
In these situations, a creditor will contact the executor and has to provide evidence about the debt. If their claim is valid, an executor will have to pay the debt before distributing assets and money to beneficiaries.
If a beneficiary can’t be found
If a beneficiary can’t be found, an executor can hold the missing beneficiaries share until they are found.
It is possible for the inheritance to be redistributed among the known beneficiaries, however they would have to agree in writing to return that part of the estate if the missing beneficiary comes forward or is found at a later date.
Generally, however, a case of missing beneficiary shouldn’t be a reason for an executor to hold back inheritance from other beneficiaries, only the portion due to the missing beneficiary.
Delays in the probate process
Probate is a famously slow process. Even in the most clean cut circumstances it can take six months to a year for grant of probate to come through and only once debts of the estate and tax liabilities have been paid can distribution be made to beneficiaries.
Sometimes this is due to claims from creditors, other times it might be down to the Inland Revenue challenging information related to Inheritance Tax, which executors also have to pay.
It’s important to take this into consideration, along with any other tasks an executor may have to get done like valuing the estate and selling a property.
To allow times for Inheritance Act claims
Sometimes, executors will deliberately wait 6 months before giving money or assets to beneficiaries. This is because there is a six month period following grant of probate for claims to be made under the Inheritance (Provision for Family and Dependents) Act 1975.
Doing this guarantees a fair distribution of the deceased's assets and avoids the problem of having to get beneficiaries to repay money or return assets should a claim be successful.
How long can an executor withhold money from beneficiaries?
It’s not unreasonable for the executor to take up to a year to deal with the estate of the deceased. This is sometimes called the ‘Executor’s Year.’
As we’ve noted, the probate process can be lengthy, and even when grant of probate has been issued, an executor has key responsibilities they must carry out before assets and money are distributed according to the will.
For example, an executor might decide to publish a notice giving creditors two months to make a claim against an estate.
Similarly, they may wait 6 months after grant of probate to make sure no family members or dependents make a claim, either.
Consequences of an executor withholding money from a beneficiary
The decision of an executor to withhold money from a beneficiary may have far-reaching effects, like legal disputes, court interventions, or financial liabilities.
These effects have a significant impact on how the deceased's possessions are handled and how the parties involved engage with one another:
Legal disputes
The executor may have legal action brought against them if a beneficiary feels they were unlawfully denied their inheritance. Such actions may result in drawn out legal disputes that lengthen the probate process and raise costs.
Broken relationships
Holding on to money could lead to conflict between the executor and the estate's beneficiary. This could be particularly difficult if both parties are related.
Financial consequences
If money is inappropriately held onto the court may force the executor to pay damages if they hurt the estate's or a beneficiary's finances.
What to do if an executor is withholding money
If you suspect an executor is unreasonably holding money or assets back from beneficiaries, there are steps you can take:
It’s up to an executor to keep beneficiaries and other parties up to date on the process of managing the estate. In the first instance, you should approach the executor and ask them for an update and an explanation for the delay.
If the executor can’t give a good reason for the delay, you can request they provide an “account” of the Estate, which should tell you how much you are due to receive.
If you are still no further along, it is possible to get a court order to force the executor to provide an inventory and account of the estate.
Finally, you may be able to get the executor removed by applying to the court. This is achieved by first sending a letter to the executor warning them of this action before applying to the court.
Legal action in these kinds of cases can be lengthy and costly, especially if you don’t follow the right processes.
If you are considering taking legal action against an executor who you believe is unreasonably withholding money, it is first advisable to get expert help from a solicitor experienced in wills, trust and probate matters.
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In short, an executor of a will cannot withhold money from beneficiaries for no good reason, or for their own gain.
That being said, it is important for beneficiaries to understand that the process of probate is not quick, and delays can happen for many reasons.
Before beneficiaries are given their inheritance, an executor may have to pay debts, inheritance tax, and any other fees, all of which should come from the estate. Furthermore, executors should wait an appropriate amount of time for claims to be made against the estate to avoid complications.
If you need help with any part of the probate process, our expert wills, trust, and probate solicitors are on hand to support you and help you understand your rights if you feel an executor is withholding money or assets for their benefit.
To learn more, tell us about your situation using our simple online form and get fast, affordable help from trusted solicitors in the UK.