Inheritance Tax - Double Nil Rate Allowance ?

CADext

My Mother died January 2012. Her total estate is worth approx £500K. Her husband died in 1985 and left everthing to my Mother. I think she is entitled to 100% of her husbands IHT allowance at todays rate of £325K, plus her own £325K nil rate band allowance. But solicitor is telling me that the allowance was only £67K in 1985 so her full nil rate band would now be £325K + £67K = £392K. Meaning tax at 40% will be payable on approx £108K = £43K in tax. But I think the nil rate band should be £325K + £325K = £650K nil rate band and so no Inheritance tax is payable. Who is right, me or the solicitor. Thanks

purple_haze

You.The solicitor is wrong.

Pennywise

Seconded, the solicitor is wrong. I think you should be considering a different solicitor. This is very basic stuff which indicates that they don't really know much about inheritance tax which is a worry for someone dealing with a will!!

getmore4less

Who are the executors?

CADext

The solocitor is the named executor. At the moment we are giving him the benefit of the doubt and hope it's just that his communication skills are rubbish. We have queried his viewpoint and await a reply. Will post when we get it.

xylophone

http://www.hmrc.gov.uk/inheritancetax/intro/transfer-threshold.htm

John_Pierpoint

CADext wrote: »

The solicitor is the named executor. At the moment we are giving him the benefit of the doubt and hope it's just that his communication skills are rubbish. We have queried his viewpoint and await a reply. Will post when we get it.

Sounds like you are stuck with the idiot and his fees..

The transferable percentage-unused of the nil rate band, dates back to 2007; though the IHT400 form procedure was simplified in 2010, for situations where it is self evident that IHT will NOT now be payable, which are called "excepted estates" and a simpler procedure built round the form IHT205 applies.

From the link you have been given above:
100 per cent of the unused Inheritance Tax threshold to transfer and the value of the estate is less than twice the threshold

If 100 per cent of the unused threshold is being transferred and the value of the estate is less than twice the threshold when the second spouse or civil partner dies (£650,000 in 2011-12) the estate may be classed as an 'excepted estate'. Follow the link below though to find out the other qualifying conditions for excepted estates. If the estate does qualify as an excepted estate, you'll need to complete form IHT217 to claim the unused threshold. Return this together with form IHT205 and the forms you need for probate (or confirmation in Scotland).
What qualifies as an 'excepted estate' for Inheritance Tax?


Can you prove the events in 1985 - presumably a copy of the probate and the will back then, should be self explanatory?

Pop back here to verify any other issues as the valuation of the estate and application for grant of probate progresses.

CADext

Thank you so much John. That is very useful information. The solicitor is an old friend of my father who died in 1985. I think he will end up charging us a ridiculous ammount of money (£180/hour +VAT). He did give us an alternative of 1% of estate + £150/hour +VAT !!!!! For what looks to me a very straightforward case for probate. But the rest of my family feel we have to use him because of the decision my father made all those years ago. But we do need to put him straight regarding the IHT allowances. Thanks again.

getmore4less

You could offer to do some of the work yourselves although in my experience they don't like it.

When you say rest of the family, only the benifitiaries really need to be involved if you want then to renounce so you can DIY,

Thing is they have to agree, but this level of incompitence does not inspire confidence, wonder if they have done any probate work in the last few years.

Wegster

I would question the solicitors ability to handle this estate.

One important point - has the solicitor given a written estimate of his charges. I used to work for the Law Society (now the Solicitors regulation Authority) and there is a requirement that before the solicitor styarts work he/she must give you an estiamte of their charges. If they don;t you may have grounds to complain and get the bill slashed.

For what it is worth 1% & £150 p/h is extortionate. In my experience, for this size of the estate, you shouldn't pay any more than 1% inclusive.

Have you thought about doing some of the "leg work" yourself & just get the solicitor to draft the paperwork? I helped a friend with this simply by searching "DIY Probate" I cam across packs/guides that helped.

John_Pierpoint

CADext wrote: »

Thank you so much John. That is very useful information. The solicitor is an old friend of my father who died in 1985. I think he will end up charging us a ridiculous ammount of money (£180/hour +VAT). He did give us an alternative of 1% of estate + £150/hour +VAT !!!!! For what looks to me a very straightforward case for probate. But the rest of my family feel we have to use him because of the decision my father made all those years ago. But we do need to put him straight regarding the IHT allowances. Thanks again.

Getting rid of an executor especially a sole executor is a tricky business (so I am told).

I am officially "retired" - I've got a "crumblie pass" to prove it - so I have had the time to give the estate of my late uncle more time and effort than a solicitor (on £180 per hour) could ever have put in.

I don't know how many complexities might develop during your probate adventures, but little did I know, when I confidently said to my other beneficiaries "Well now that we have a transferable nil rate band for InHeritance Tax, this should not be too difficult - I've done several other estates already"

My adventures started here:
https://forums.moneysavingexpert.com/discussion/comment/51459779#Comment_51459779

and you can find the rest of them by going to Forum Search, see green bar above, clicking through to "advanced".
These are your search terms "Mr Dog" "John_Pierpoint" & "Saving Tax" in the sub forum.

I managed to get snarled up in just about every bit of bureaucratic incompetence on the go, over a period of 3 years. So I just plodded on with the help of this and other internet resources, to eventually achieve a satisfactory outcome.

If the estate is not simple, it can develop its own life - I will be writing out my last R185s on the 6th of April 2012.