Recent guidance from the Law Society of England and Wales has highlighted growing concern around changes to pensions due to come into effect on 6 April 2027, which would make personal representatives responsible for paying inheritance tax (IHT) on a deceased person’s pension assets.
Personal representatives have a duty to identify assets, settle liabilities and distribute the estate correctly. If these duties are not carried out properly, personal representatives can be held personally liable for any resulting losses.
The proposed changes would increase that risk. As the Law Society has noted, the measures “put personal representatives at greater financial risk by taking on responsibilities for assets such as pensions or death benefits that they cannot control”. This represents a significant extension of the role of personal representatives, as they may become responsible for assets that sit outside the estate and beyond their direct control.
In practice, this could mean personal representatives facing tax demands in relation to assets they cannot access and which will often be paid outside the deceased’s estate. This added level of risk may make both lay executors and professionals more reluctant to act.
These challenges are even more pronounced in cases where the deceased has left no valid Will and the next of kin do not have a detailed knowledge of their affairs. In such estates, identifying both assets and beneficiaries can be particularly difficult. Unknown pensions, inactive accounts and untraced funds are common issues and, without careful investigation, may never come to light.
This is where the Inheritance Tracing team at Taylor Emmet LLP can support the estate administration process. By carrying out thorough and bespoke asset and liability searches, we help ensure that all elements of the estate are identified, including assets that are not immediately visible. This not only supports accurate tax reporting but also provides a layer of protection for personal representatives by evidencing that reasonable steps have been taken.
In cases where there are no known relatives, we also work closely with professional genealogists to trace and verify beneficiaries. This ensures estates are administered correctly and helps personal representatives fulfil their duties with confidence, even in more complex circumstances.
As expectations on personal representatives continue to increase, the importance of a complete and well-documented approach to estate administration cannot be overstated. Identifying and tracing all assets is no longer just best practice, it is a key safeguard against risk, helping personal representatives carry out their role properly while protecting themselves from potential liability.
For further information, please email inheritance@tayloremmet.co.uk or call 0114 218 4200 to speak to a member of our Inheritance Tracing Team.