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Record costs associated with a legacy going to residuary beneficiaries?

Scenario: Where a property has been passed as a 'specific gift' to three people who are also residuary beneficiaries of the estate. 2 beneficiaries receiving 25% of the value and the other 50%. And where costs have arisen during administration and have been paid by a source of cash associated with the estate.

Solution: You can show the payment of those costs as interim distributions to the residuary beneficiaries in question. N.B. The admin expenses themselves don’t get entered as admin expenses of the estate and they’re NOT payable by the estate unless the will specifically states so.

Steps to take:

1. Record 1 x house in asset browser (e.g. at £200,000)
2. 0.5 of house transferred as specific legacy to Res Ben1. (£100,000) in asset browser.
3. 0.25 of house transferred as specific legacy to RB2 and RB3. (£50,000 each) in asset browser.
4. Costs of selling the house come to £1000.
5. Show these costs against the RBs as an interim distribution of £500 from RB1, and £250 each from RB2 and RB3. Narrative along the lines of “distribution used to pay part of costs on sale of specific gifted house”. The money being taken out of relevant bank account as happened in reality when paying the cost of sale.

N.B. If the house sale costs have all been dealt with separately to the estate accounts then they don't need to be entered at all.

If the legatee is not also a residuary beneficiary, you may wish to read this article.

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