Probate & IHT

xylophone

http://www.hmrc.gov.uk/inheritancetax/iht-probate-forms/help-iht205-C5/pensions.htm

John_Pierpoint

A bit of background to this situation:

If someone has "other means" they can put off drawing on their pension fund to age 75 [A pension fund is an investment like an ISA but created using tax free income. ie the "cheapest" method of saving for most people; especially people with large incomes, who are saving higher rate tax]. So rich "successful" people can find themselves with very big pension pots.

What is more they may be still "earning" lots of money (Chairman of this? consultant of that? Hosting a dancing show on the TV?) and don't want to retire.

What is more the pension fund will be administered by trustees and the trustees can be "told" what to do with it should the "rich" contributor, "pop their clogs" with the fund still in tact and the fund will not be part of their estate for InHeritance Tax (IHT).

However come the age of 75 the fund had to be turned into an annuity, which might simply die with the (still working?) pensioner. So a system called draw down (which might run out if the pensioner is still alive in a nursing home aged 101) was created as an alternative to an annuity.

The creator of the pension fund does not really want to leave 40% of it to the government.

On the other hand the government has not given a "subsidy" of (higher rate) tax relief to a high earning person to create a dynasty.

So HMRC is fishing for this sort of "hidden" wealth with these questions.

[I cannot speak for experience, I have not died yet;). There is no grand underlying logic to the tax system, it is largely an accretion of a massive tome of rules and exceptions - a happy hunting ground for tax gatherers and lawyers and accountants playing poacher and gamekeeper. If I gave got the gist wrong, I sure one such expert will be along soon to correct our perceptions.]

lilab_2

With regard to the original probate question and length of time and reading others costs: my sister and I were appointed joint executrices of my late mother's estate. She passed early June 2012. We completed all the forms ourselves and received the Grant yesterday at the grand total cost of £107. You can do it yourselves and it needn't take a long time. You just have to make sure that you fill in all the papwerwork correctly.

Nine_Lives

As the thread has been bumped - just to update that everything has been paid out now - my mum has received access to my dads money & the cost of this was slightly over £1000. Yes it could/would be cheaper doing it herself/ourselves, but we didn't know what we were doing & my mum was happy to pay the solicitors to get it right first time.

John_Pierpoint

lilab wrote: »

With regard to the original probate question and length of time and reading others costs: my sister and I were appointed joint executrices of my late mother's estate. She passed early June 2012. We completed all the forms ourselves and received the Grant yesterday at the grand total cost of £107. You can do it yourselves and it needn't take a long time. You just have to make sure that you fill in all the paperwork correctly.

Congratulations that must be something of a record?
It took me months to (not) sort out the interplay between the winter fuel allowance, the pension and the attendance allowance when my mum passed on.

K_P83 wrote: »

As the thread has been bumped - just to update that everything has been paid out now - my mum has received access to my dads money & the cost of this was slightly over £1000. Yes it could/would be cheaper doing it herself/ourselves, but we didn't know what we were doing & my mum was happy to pay the solicitors to get it right first time.

:T You got there in the end.

getmore4less

John_Pierpoint wrote: »

Congratulations that must be something of a record?
It took me months to (not) sort out the interplay between the winter fuel allowance, the pension and the attendance allowance when my mum passed on.



:T You got there in the end.

I found pensions and AA were a doddle I ended up having to phone around loads of places to try and sort out my mums winter fuel, my dad died in the same year before the qualifying period she only got 1/2 automaticaly gave up in the end.

The admin costs for winter fuel must be massive they might as well just stick it on the pension, then those that don't realy need it because they have other income get it taxed.

lilab_2

John_Pierpoint wrote: »

Congratulations that must be something of a record?
It took me months to (not) sort out the interplay between the winter fuel allowance, the pension and the attendance allowance when my mum passed on.



:T You got there in the end.

Well I phoned dwp straight away and they sent me paperwork within two days which I sent back. Nothing complicated. They told me that they would inform all relevant departments and I needn't get in touch again. Within a couple of weeks they had sent final pension payment through. We were very quick to return all probate and IHT forms as my mother was very organised and had all her paperwork in a neat filing system. We didn't have to hunt for anything.
We sent papers to Brighton Probate Office who are very efficient and helpful. We swore our oath and they sent the Grant back exactly one week later.
We have also been lucky in that mum was already selling her house before she passed away so we are also now ready to exchange contracts on that sale.
Although stressful in that we were filling in unfamiliar paperwork and went through umpteen print runs as we checked, checked and checked again that we had it right, I am glad that we haven't had the added stress of dealing with a third party and waiting for their responses etc.