Changes introduced by the Act
The Finance Act 2010 (the “Act”) was passed on 3 April 2010.
The Act introduced a number of amendments to the administration of Probate and estates where there are non-resident beneficiaries. The changes are intended to simplify and streamline the administration of the probate procedure.
Administrative Changes in Probate
The main changes made are as follows;
(a) The Act has removed the requirement for the Revenue to certify the Inland Revenue Affidavit before Probate or Letters of Administration will be issued by the Probate Office for deceased persons who died on or after 5 December 2001.
(b) A new version of the Inland Revenue Affidavit, and the relevant Probate documents, are now to be submitted to the Probate Office directly. The Inland Revenue Affidavit must be submitted in duplicate. Thereafter, as soon as practical after Probate or Letters of Administration have been issued, the Probate Office will transmit to the Revenue, the relevant information held in electronic form.
Estates with Non-Resident Beneficiaries
Before the passing of the Act, a personal representative was secondarily liable for a beneficiary’s CAT (the beneficiary being primarily accountable).
Now the Act provides for the appointment of an agent where there is a non-resident beneficiary in a deceased’s estate. However, the requirement to appoint an agent varies, depending on whether the personal representative(s) is resident in the State.
(a) Non Resident Beneficiaries - Non-Resident Personal Representative
Under the Act, where there is a non-resident beneficiary and a non-resident personal representative (or if more than one personal representative where are all are non-resident) a solicitor within the State must be appointed to act as an agent on behalf of the personal representative(s) of the estate. The solicitor should be one who is lawfully practising in the State.
The Probate Office have confirmed that they will not issue the Grant of Probate or Letters of Administration in respect of the deceased’s estate unless a solicitor has been lawfully appointed within the State.
(b) Non-Resident Beneficiaries - Resident Personal Representatives
Where the beneficiary is non resident, but one or more of the personal representative(s) is resident in the State, the resident personal representative and/or solicitor are personally assessable for the non-resident beneficiary’s CAT, where the non-resident beneficiary does not pay CAT or file a return, within the relevant deadline (being 31 October each year).
On that basis, it is strongly advised that, where possible, the solicitor acting in such an estate should agree with the non-resident beneficiary that they will pay and file on their behalf for CAT purposes, in order to ensure that the relevant CAT has been paid.
In order to minimise the personal representative’s/solicitor’s personal liability, the Law Society and the Revenue have recommended that the resident personal representative (or solicitor) should write to the Revenue indicating that he or she is intending to distribute the assets attributable to the non-resident beneficiary from the estate of the Deceased within one calendar month, where that personal representative/solicitor is satisfied that any relevant CAT pay and file obligations have been met by the non-resident beneficiary.
If the Revenue do not raise an audit on the non-resident beneficiary in relation to this letter within the month, the personal representative (or solicitor) may distribute the benefit to the non-resident beneficiary. Where the Revenue subsequently audits the non-resident beneficiary, the resident personal representative or the solicitor will not be liable for any additional CAT liability, where they acted honestly and in good faith, did not deliberately fail to comply with his or her obligations and no longer hold any assets for the benefit of the non-resident beneficiary.