Bereaved are edging closer to financial risk

News

The proposals laid out in the Finance Bill 2025-26 could put personal representatives – often family or friends of the deceased – at greater financial risk, the Law Society of England and Wales said as the Lords Sub-Committee publishes its report on the bill.

The bill reforms inheritance tax, unused pension funds and death benefits.

In its response to the draft legislation published and a call for written and oral evidence last year, the Law Society raised concerns about the proposed responsibilities of personal representatives (PRs), also known as an executor/administrator.

This included:

• lack of control over assets: PRs are taking on responsibilities for assets such as pensions or death benefits which they cannot control*
• liquidity challenges: if PRs are liable for inheritance tax on these assets, they could face financial difficulties, especially if the assets have already been spent or are difficult to recover
• reluctance to act: family or friends may no longer want to act as PRs, or they may require costly advice if things go wrong. Professionals might not be willing to accept executorship appointments either
• unfair tax liability: the responsibility to pay inheritance tax should apply based on where assets are held. Making PRs responsible for tax on assets they do not control places them in a risky and potentially difficult position

Law Society vice president, Brett Dixon, said: “The death of a loved one is never easy, and managing their estate is an important process designed to distribute assets according to the individual’s wishes.

“The role of a personal representative – the person legally responsible for administering the estate of someone who has died – is extremely important.

“Inheritance tax should, wherever possible, be applied based on where it is held. Making personal representatives responsible for tax on assets they do not control, places them in a risky and potentially difficult position.

“We are pleased that the House of Lord’s Finance Bill Subcommittee has listened to evidence from stakeholders, including the Law Society, and has recommended that the UK government consider approaches that better support and protect personal representatives.

“It is essential that the government recognises the complexities personal representatives face when handling an estate and takes our recommendations into account as the Finance Bill progresses through Parliament.”

Notes to editors

*Pensions do not form part of an estate, so you cannot leave your pension to anyone in your will. Pensions and death benefits are in a pension fund so they are controlled by the pension fund administrator or a private trustee

Read the Lords Committee report on the Finance Bill 2025-2026.

Read about the government’s policy paper – inheritance tax – unused pension funds and death benefits.

Our consultation response and written evidence is available upon request