Executors fees and Inheritance Tax

tsardust

Apologies if I should have posted this elsewhere but its my first time!

My Father has an estate of approx £700k but it is complicated with lots of different share holdings, savings accounts and 2 trusts. He is getting increasingly frail and worries a lot about the work for me in getting probate when the time comes.
Is it possible to employ solicitors/accountants do all the work and then charge the fee to his estate before the Inheritance Tax calculation thus saving 40% of the fees?

dunstonh

The fees can be taken from the estate.

However, be wary. I have had nothing but problems from these low skilled professional executors. Ranging from misinformation, inaccurate assumptions and down right rudeness in one case (he told a client and put it in writing that I had mis-sold an investment and gave reasons that had nothing to do with the policy type in question. It turned out my advice meant his fees which were a percentage of the estate ended up being around £500 instead of the £5000 he thought he was getting as the investment couldnt be included in the estate. I complained and got an apology from the solicitor firm he was linked to).

I have found the best ones have been actual solicitors. And they are not always more expensive.

John_Pierpoint

tsardust wrote: »

Apologies if I should have posted this elsewhere but its my first time!

My Father has an estate of approx £700k but it is complicated with lots of different share holdings, savings accounts and 2 trusts. He is getting increasingly frail and worries a lot about the work for me in getting probate when the time comes.
Is it possible to employ solicitors/accountants do all the work and then charge the fee to his estate before the Inheritance Tax calculation thus saving 40% of the fees?

As I understand it the last thing that can be charged against expenses allowable for IHT (at 40%) is the cost of the funeral and wake (inclusive of grave stone but excluding travel expenses of mourners). So roll out the barrel and get a "subsidy" from HMRC.

Some of the subsequent legal /accounting costs can be set against the income of the estate, if they have been needed to secure the assets of the estate, here again travel costs are not likely to be accepted.
(IHT does NOT allow the claiming of the sort of costs that can be claimed for CGT, though if you make a loss on the disposal of property or securities like shares, the lower figures can be substituted for the probate valuation figures and will result in a repayment of some IHT).

Taxman's view of the proceedings is here:
http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm10000.htm

Obviously if the elderly person can be persuaded to tidy up their affairs (and put their income into gross paying monthly paying interest accounts) they will leave less money and have less accrued income (to be taxed to income and IHT). Getting the estate sorted out within 6 months minimises the risk of interest being charged and the beneficiaries suffering a bunching of estate income for their income tax returns.