IHT - the limit

If IHT is due then it MUST be paid within 6 months of the person dying.


However, there are a number of questions to ask before you can get an answer as to any liability for IHT

When did the first parent die?

When did the last parent die, was it the father?

Were any gifts made by any parent within 7 years of their death?

Did the first deceased parent leave all their estate to the surviving parent, i.e. did not use any of their nil rate band allowance. If they did the second parent should have the full 2 x £325k.

What was the father's (assuming he died last) net estate worth? This should include the house, all cash, any life insurance payment (that may form part of his estate), any other assets.

If the net estate is less than £625k then no IHT to worry about.

Moilles wrote: »

Hi,
I was looking for advice on IHT.
Parents house - mortgage free. Both parents have passed on (father last December). One sibling was living in the house with his wife & kids (looking after parent). House is probably above the IHT limit of 325.000. All remaining family is content with sibling & their family to remain living in the house. The property remains in late fathers name. My question is, if there are no disputes, is IHT still applicable and how would one go about sorting this out? Is there a timeline that needs to be followed (as father passed away in December '15)? Grateful for any advice/help.
Thanks
M

Are there any wills? Who are the executor(s). Any IHT has to be paid within six months of the death or penalties will be applied. Assuming the house was jointly owned then the IHT free figure is the sum of the two individual's IHT allowance. Depending on the contents of the will(s) the house may have to be sold to allow the estate to be distributed. It is the executor's decision about someone remaining in the property and how much, if any rent needs to be paid to the estate.

IHT is paid for from the estate proceeds.

And no, HMRC won't wait until it is convenient for the estate to pay any IHT due. On estates where IHT is due before probate is completed the executors have to take out loans against the estate to pay the IHT.

However, if the estate/house is worth less than £650k there will be no IHT to pay. So why not do the paperwork now?

You'll probably need to explain to HMRC the delay in completing the paperwork but, if no IHT due, I'd hope they would not be too harsh with the estate. However, if IHT is due there will be penalties for late payment.

Moilles wrote: »

There is only one WILL (fathers). My mother did not leave a WILL (died in '97). There are no disputes amongst surviving siblings about the contents of the WILL. My fathers estate only consists of his house (he left no money, bank balance, etc). As far as I am aware, he did not 'gift' anyone money or valuables. In his WILL, my father has instructed 2 'Executor's (me and my younger brother). If all his surviving family are not desperate to have his estate divided-up and his house is still being lived-in by one of his surviving children and their family...can the IHT declaration not be delayed until such time as the property (my father's one and only asset) is no longer in the family? Who would be liable for the IHT?
Thank you in advance for your patience.

The will needs to be admitted to probate and normally the estate also has to be distributed within a year of the death. The executors are personally liable if they don't deal with it in a timely manner. They don't have any discretion about the estate that they have to deal with according to the law. I suggest you remind them of the need to deal with the estate ASAP. Are you saying your father had no bank or building society accounts and no other belongings? They may be of relatively small value but they all need accounting for. As others have said there are tax implications of allowing someone to live in the house has the property been insured? The executors need to take all this into account. There is plenty of advice available here and online. Don' t delay any further.

getmore4less wrote: »

Just because you are named in the will does not mean you have to act.

You can ignore, no liability.

Someone needs to do something to avoid problems later and the named executors are best placed to do this but they don't have to do anything(with the usual caveat they must do nothing to intermeddle either).

Untill someone acts there is no executor or administrator.

if someone else wants to do it they can renounce at that time.

Doing nothing when appointed as executor in a will really is irresponsible. If they are not prepared to act they should renounce the appointment ASAP.