A reader’s question to This is Money highlights the risk to executors who distribute an estate without realising that legacies to charity are inheritance tax exempt.

‘J.D’ received a substantial sum from an estate left by a friend. However three charities are now challenging the will after it appear that inheritance tax was applied incorrectly to the charities’ gift. Resultantly, J.D. may be forced to refund his share

If executors of the deceased’s estate apply the IHT liability proportionately to both the charitable gifts and family gifts, then the charity is within its rights to claim back any IHT deducted from its share of the estate.

Read the full letter and response at This is Money

Sources:

This Is Money

Step UK News Digest 1st September 2009