Inheritance help

lavenderblue_3

I am due to inherit about £70K shortly, however my benefactor died without leaving a will. It was always his wish to leave the value of his house split 50/50 between my brother and I. My Mother is his executor and has been advised by the solicitor dealing with his estate not to touch the money but to leave it in a holding account, they will then write to my brother and I asking where we want the money to be sent. We understood by doing it this way, we would avoid tax implications however, we are now not so sure.

Do I have to declare this money to the IR? Are we liable for some sort of tax on the money? Is there any change to this arrangement we could make to reduce the tax liability. We understand about the one off gift thing but Mum (ever the optimist) is worried that she will die during the next 7 years and we have to pay on her estate too.

Should we seek some sort of tax based advice? If so, who should we speak too. Am sorry about all the questions but we really don't have a clue what to do.

Murdina

If the person died intestate (ie without a will) then there are rules about where the money is to go. You say your mother is executor - this only refers to a person who has to carry out the wishes in a will? I wonder if in fact your mother is the one who is due to inherit the money under the rules of intestacy? If that is so then if she then gives your brother and you the money and dies within 7 years and otherwise has an estate in excess of the nil rate band for inheritance tax then there would be IHT to pay on her gift to you. It is however quite possible to alter the bequest even if there is no will such that the person due to have the money gives up their right to it and it is redirected - with a will this is called a deed of variation; not sure about an intestacy but it can certainly be done with intestacy. Point of this is that it stops it being a gift from mother to you. Clarify with the solicitor what exactly he or she is trying to do. Incidentally you as the recipient do not have to declare anything.

lavenderblue_3

Thanks for the reply Murdina. My Mum has been granted probate and as such is due the whole amount of the estate (under about £160K all in all) It was my Uncle's wish that his money was split between my brother and I but died before he could make a will. Deed of Variation sounds like it could be an option, I will mention it to Mum so she can clarify the situation with the solicitor on monday. I really value your help.