The Gazette 1973

title, the estate duty is a charge and a prudent pur- chaser should require a Certificate of Discharge from Death Duties if it appears from the title that a claim for duty may have arisen. Section 8(3) of the Finance Act, 1894, makes the executor "accountable for the estate duty in respect of all personal property wheresoever situate of which the deceased was competent to dispose at his death." It will be noted that this provision covers a much wider range of property than the free personal estate situate in the State and passing under the will of the deceased. Section 8(4) of that Act (as unamended) provides that accountability for duty in respect of all property, where the executor is not accountable, falls on trustees, beneficiaries, alienees "or other person in whom any interest in the property . . . is at any time vested." The amendment of section 8(4) of the Finance Act, 1894, effected by section 33 of the Finance Act, 1971, enables the Commissioners to recover duty from beneficiaries and others in any case in which the executor was formerly the sole person accountable. Cases have oc- curred, for example, in which executors sold leasehold properties and distributed the proceeds without regard to claims for estate duty in respect of such properties. Gases have also occurred in which foreign executors sold leaseholds situate in the State in respect of which claims for duty were outstanding and the Com- missioners had no means of enforcing their claims. The amending section is therefore an important Revenue safeguard and to abandon it would restore the situation in which serious loss of duty could emerge. Estate Duty on real estate passing on a death, under any title whatsoever, is a charge thereon. To this extent, real property is equated with all other personal property other than the personal estate within the jurisdiction of an Irish Grant. As already pointed out, leaseholds subject to an Irish Grant are in an anom- alous position. To remove the charge from real estate would create a further anomaly rather than be a "logical extension" of the existing position. In view of their statutory obligation to protect the revenue, the Commissioners could not agree to any proposal which would have the effect of lessening their powers to re- cover death duties where claims to such duties have arisen. In relation to the issue of Certificates of Discharge from Death Duties I might point out that no prudent Solicitor should complete the winding up of an estate without obtaining a Certificate. An executor is entitled to this protection in his own interest. It should therefore be assumed that Certificates would be applied for in all cases before an estate is finally distributed. I might also point out that sales of leasehold properties by personal representatives "in due course of administration" can- not be completed until a Grant has issued. There is normally, therefore, a time-lag between the agreement for sale and the final closing of the sale. If a Certificate is applied for in good time, I see no reason why it should not be available before the closing date. Nor do I see any difficulty in the executor indemnifying the purchaser in respect of any claims for duty which might affect a leasehold property. After all, the Re- venue Commissioners were, in effect, providing such an indemnity up to the date of the passing of the Finance Act, 1971. On this question of the issue of Certificates might I enlist your help in easing a burden which we have to bear far too frequently? Very regularly we get applica- tioss for certificates accompanied by a letter which 21

letter of September 11th, 1972 and hope you will accept, in explanation, that the delay was due entirely to pressure of other business. At the outset I agree that section 33 of the Finance Act, 1972, produces the effect to which you refer in relation to sales of leasehold properties by personal representatives "in the course of administration". It cannot be agreed that this was an unforeseen consequence of the section. In so far as any speculation as to the "intention of the Act" may be relevant it is reasonable to assume that the protection of the revenue from estate duty may have been the prin- cipal object of the Oireachtas in this particular instance. The section in question does not alter the primary inci- dence or accountability for duty, nor does it create a charge for duty which did not already exist; it en- larges the power of the Revenue Commissioners to recover duty from persons who have derived property on a death where formerly the personal representative was alone accountable. The general rule as to incidence of estate duty is that, apart from any express direction by a testator or settlor to the contrary, the duty must ultimately be borne by the beneficiaries of the property charged in rateable proportion to their interests in such property. (Finance Act, 1894, sections 8(4), 9(4) and 14(1); Berry v. Gaukroger (1903) 2 Ch. 116; In re Owens (1941) Ch. 17). To this rule there is one notable exception. Apart from an express direction, the estate duty in respect of a deceased's free personal property in the State (including leasehold property) is borne by the residuary legatee. (In the case of an intestacy, the duty is borne rateably by all the statutory next of kin). It is only in relation to the personal estate which vests in the executor as such, that is, the personal estate within the jurisdiction, to which the Irish Grant applies, that the estate duty is a testamentary expense; it is not a charge on the property subject to duty, but a testamen- tary expense recoverable, like other administration ex- penses, primarily out of the residuary estate. The Finance Acts contain no provision enabling the executor to recover a rateable part of the duty on free, personal estate from each beneficiary. Personal property may pass on a death under various headings. Free personal estate situate outside the State passes under the will or intestacy of the deceased; personalty may pass by express trust, by parol trust, by survivor-ship, by nomination or by many other titles on a death; personal estate may be deemed to pass on a death through being the subject matter of a gift, by being property purchased or pro- vided by the deceased or by being within any other category of property deemed to pass on death. In all these cases tbe estate duty is a charge on the property over which the deceased had, and exercised by will, a general power of appointment, vests in the executor and is available for the payment of the debts of the de- ceased; In O'Grady v. Wilmot, (1916) 2 A.C. 231, the House of Lords held that it did not vest in the exe- cutor "as such" and that the estate duty thereon was not a testamentary expense payable out of the residuary estate but was a charge on the appointed property itself. Leasehold property is "personal property" in all the categories referred to above. It will therefore be seen that the only leasehold property which does not bear its own proportion of the duty chargeable on a death is "free" leasehold property situate in the State and subject to the Irish Grant of Probate or Letters of Administration. In relation to the sale of leaseholds passing or deemed to pass on a death under any other