Inheritance tax help

goldbyron

My partner's mother is leaving a will (she is terminally ill) which splits the estate 50:50 between her and charity. The will initially was 50:00 estate split between her and her sister however their mother has just changed it due to a recent diagreement. My partner is still going to split her half of the estate with her sister. However the estate does go over the inheritance band which means paying a hefty tax bill prior to receiving probate which my partner desperately needs to pay off the current monthly mortgage and bills after her mothers death. If the estate is split with a charity 50:50 who is then responsible for paying the mortgage on the estate until probate is granted. Also is inheritance tax payable if the half of the estate that falls to my partner is under the band? Sorry for the questions but the financial strain of this is going to be huge especially after a bereavement and I am really concerned my partner won't be able to maintain the mortgage payments and end up with a bad credit score for a debt that wasn't hers. I am also concerned that she will split her half after having spent months paying all these expenses while her sister just gets the money and no worry. Any help on this would be much appreciated.

Liz_the_Whizz

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Liz_the_Whizz

Hi goldbyron,

It must be a horrible time for everyone. It is great that you are able to support your partner by thinking through some of the practicalities.

One thought is to approach the mortgage lender about a payment holiday once the sad event occurs. They may well go along with it as they can simply roll up the missing payments into the final settlement of the outstanding debt as they know they will get it in view of the substantial estate (I'm inferring this as it must be over the £312k inheritance tax band as you expecting a hefty tax bill).

Maybe the solicitor to your partner's mother-in-law could advise? Is your partner the executor BTW?

dzug1

goldbyron wrote: »

My partner's mother is leaving a will (she is terminally ill) which splits the estate 50:50 between her and charity. The will initially was 50:00 estate split between her and her sister however their mother has just changed it due to a recent diagreement. My partner is still going to split her half of the estate with her sister. However the estate does go over the inheritance band which means paying a hefty tax bill prior to receiving probate which my partner desperately needs to pay off the current monthly mortgage and bills after her mothers death. If the estate is split with a charity 50:50 who is then responsible for paying the mortgage on the estate until probate is granted. Also is inheritance tax payable if the half of the estate that falls to my partner is under the band? Sorry for the questions but the financial strain of this is going to be huge especially after a bereavement and I am really concerned my partner won't be able to maintain the mortgage payments and end up with a bad credit score for a debt that wasn't hers. I am also concerned that she will split her half after having spent months paying all these expenses while her sister just gets the money and no worry. Any help on this would be much appreciated.

If the charitable donation brings the remaining estate below the IHT threshold then no IHT is payable.

The executors of the deceased are responsible for paying the mortgage, assuming there is no insurance in place to pay it off. (At one time this was a virtually mandatory condition for a mortgage but of recent years lenders have been less insistent.) In reality it just has to roll up until paymernt can be made.

Was it an endowment mortage? If so the insurance element should pay the mortgage off however badly it's performing.

goldbyron

I just saw the replies to this - it has been quite hectic.

The executor is my partners sisters ex partner (yes complicated). So he is rather keen for the sister (his ex) to get her share as they have a child together.

It sounds promising that the mortgage can build up payments until the estate is sold. I am hoping that they won't contest the will which will prevent delay whilst my partner is liable for the mortgage.

The whole IHT (if liable) and probate issue is a nightmare. I can't believe that the band is set so low.

silvercar

Tax bills can often be delayed while a property is sold.

Why does your partner feel she is liable to pay the mortgage and bills of her mother's home? If it is her mothers home and she is not part owner, she doesn't have any liability. The outstanding mortgage is deducted from the proceeds of the sale, so it won't come totally out of your partner's half.