Inheritance Tax: Save £100,000s with simple advanced planning Article Discussion

jem16

silentotter wrote: »

I am just about to go through probate having lost my last parent and must admit to feeling somewhat confused by inheritance tax. The Estate amounts to roughly £420,000 in total.

I understand that the allowance is £300,000. There are no pensions being paid in and no gifts have been made to anyone on the last 7 years. Would I be liable to any or much inheritance tax?

Is is worth getting a solicitor for an estate this size or would an IH tax specialist be better?

Help!!

Silentotter

If your other parent left all to the parent who has just died you will be able to use the allowance x 2. So £600,000 in total.

Therefore you should have no IHT to pay if that is the case.

silentotter

Thanks Jem. My dad died in 1999 and my sister and I did not recieve anything in his will so I am sure everything passed directly to my mum who has just passed.

Would it be worth consulting one of those inheritance tax specialists? If I then have an allowance of £600,000 should I complete the short IH probate form or the full IH200 form when inheritance tax is due?

Do you let them work out that no tax is due on the full IH form or not give them the opportunity and just the complete the short form, that is the question?

Silientotter

jem16

This post gives good information on what you need to do.

http://forums.moneysavingexpert.com/showpost.html?p=9255075&postcount=2

I would not think any specialist would be needed as I'm sure HMRC will help you out.

harryhound

Good luck trying to assemble this lot:

These are: 1) A copy of IHT 200, IHT205 or full written details of the assets, 2) Death Certificate, 3) Marriage Certificate, 4) copy of the Will, 5) copy of the Grant of Representation, 6) details of gifts made in the 7 years before death, and 7) Valuations of any assets that passed to beneficiaries other than spouse.

That said, I've now done two probates (maiden aunt and mother) and found the Capital Taxes office (still in Nottingham, I think), helpful.

(See my posting about 8 further back)

Harry,

Woops it is a case of "change the name and do the same" http://www.hmrc.gov.uk/cto/dec06.pdf

sloughflint

martinm wrote: »

Thanks Sloughflint, calling them will be my first steps if I need to, that is the HMCS one?

I am being made redundant after 19 years monday week so I will then have some time to start on the probate.

Martin

http://www.hmrc.gov.uk/helplines/deceased-estates.htm
They are very helpful.

sloughflint

silentotter wrote: »

I am just about to go through probate having lost my last parent and must admit to feeling somewhat confused by inheritance tax. The Estate amounts to roughly £420,000 in total.

I understand that the allowance is £300,000. There are no pensions being paid in and no gifts have been made to anyone on the last 7 years. Would I be liable to any or much inheritance tax?

Is is worth getting a solicitor for an estate this size or would an IH tax specialist be better?

Help!!

Silentotter

Regardless of whether you go to a solicitor or not, try to do as much as possible to keep costs down.Once you start, you might find that you are ok.If not, at least you'll have kept costs down if they charge an hourly rate as opposed to a percentage of the Estate.

silentotter

Thanks everyone for your advice. Basically nothing has changed since my father passed on and everything was left to my mother.

Should be a straightforward case of filling in the form and sending it in to probate, even found copies of everything my mother filled in for probate when my father passed away.

Silentotter

jaspe_2

Hello,
I'm new to the board, and the whole IHT nightmare, and was just wondering how likely is it that the combined NBR change will happen? People seem pretty certain about it, but apparently it's still in the draft stage. My dad died last month and in his will he wanted a discretionary trust fund, with my mum as principal beneficiary for her lifetime. Our solicitor said we can choose not to enact the trust, pass everything to my mum and rely on the changes to the NBR rate happening to cover the IHT. But he seemed to imply this was somewhat risky as it is still only a draft. From previous posts I gather the opinion seems to be that it will happen, but as we need to decide now about the trust, would it be risky to disregard it? Currently their combined estate is just over the combined limit. Is it safer to stick with the trust, but presumably pay more in administering charges, or is it fairly low risk to rely on the combined NBR?

Also, regarding probate, am I right in thinking we don't need to include any joint savings/current accounts as they pass directly to my mum? If I've understood correctly, the purpose of probate is to get the right to administer someone's estate, not to establish how much someone's estate is worth?

Many thanks for your help

localhero

Hi Jaspe,

First of all sorry to hear about your dad.

The Finance Act containing the changes has not yet passed into law, but is very likely to proceed without amendment.

That said, if you don't want to leave things to chance, then you need not dispense with the discretionary trust just yet.

You have 2 years from your dad's death to wind the trust up (ie pay the proceeds straight to your mother), so that legally it would have the same effect as if he'd left it straight to your mother - so you may choose to sit tight for a while.

Passing his estate to her in this way would remove continuing legal costs, but you will need to take a view on your mother's potential liability to care fees.

For, if she does require long term care at some stage, then your dad's estate would be taken into account when she is means tested in relation to funding.

You are quite right about probate. Probate is essentially providing authority to deal with the estate and where there are joint accounts, simply sending a death certificate to the institution is all that's required to transfer the accounts into the name of the surviving co-owner.

To later claim the uplift of the nil rate band, you will need to keep detailed records of the value of his assets, (among other things) as otherwise you may encounter difficulties.

Your solicitor really should have advised you of all of this - best wishes.

harryhound

jaspe wrote: »

Also, regarding probate, am I right in thinking we don't need to include any joint savings/current accounts as they pass directly to my mum? If I've understood correctly, the purpose of probate is to get the right to administer someone's estate, not to establish how much someone's estate is worth?

I'm not sure I understand what you are asking here? You cannot get "probate" until you get an OK from the tax man (who could not find his records from when my father died), whatever the theoretical legal position may say.
My comment on how the system works in reality is here:
http://forums.moneysavingexpert.com/showthread.html?p=5050579&highlight=legal+dog#post5050579