Deceased's House valuation/CGT question/s!

xylophone

Presumably the children don't get a tax free allowance for CGT?

Children have a CGT allowance just as they have a tax allowance.


http://www.spectator.co.uk/features/8856981/use-it-or-lose-it/

"It’s worth remembering that children have the same capital gains allowance as adults,"

http://www.wilkinskennedy.com/services/tax/tax-factor/what-to-do-about-capital-gains-tax-when-someone-dies/

uknick

OP

I'm a little confused as to what the will stated with regard to the estate.

You are talking about CGT for all beneficiaries; does this mean they have all been left individual assets which they then need to sell for a possible gain?

Or, does the will state the estate value is to be split between the beneficiaries in the ratios you mention. If that is the case the CGT burden is on the estate, i.e. increase in asset value from time of death until the estate/executor can sell the assets?

If this is the case the estate gets the CGT annual allowance not the beneficiaries. This can be for up to three tax years; year of death and the two following.


https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/323671/hs282.pdf

getmore4less

The property can be passed to the benificiciaries to be sold so they get a CGT allowance each.

uknick

getmore4less wrote: »

The property can be passed to the benificiciaries to be sold so they get a CGT allowance each.

True, but as 2 of the beneficiaries are below 18 (I assume this as the OP wasn't sure if they got a CGT allowance) does this not confuse the issue as their share will have to be put into trust and then sold.

izaac

The Will states that the Estate is to be split into five 1/5ths; no individual 'gifts' are made at all.

The plan is to sell everything, then put the under 18's share into Trust til they are 21 (variation on the Will?).

getmore4less

izaac wrote: »

The plan is to sell everything, then put the under 18's share into Trust til they are 21 (variation on the Will?).

if the will does not specify 21 then they get it at 18.

you cannot change that through a deed of variation(if that what you mean)

xylophone

I don't know what kind of variation the OP has in mind but as there are minors involved, this might not be so simple.

http://www.geldards.co.uk/UserFiles/document/Deeds_of_Variation.pdf

"A variation cannot be done without the consent of everyone likely to be affected by it. So a variation cannot be done if the affected persons are minor children, as they cannot enter into a deed. Such a variation would need the consent of the court before it could be done, and such consent is not readily given."

If the house is transferred to the parents in trust for their children, and the house sold (assuming the will permits this), then then each child's share should be held in an account held in bare trust for that child - the child has the right to access and control at age 18 (16 in Scotland).

It would be advisable for a solicitor to handle matters?

Any interest arising on the account is taxable on the child who has his own tax allowance.

If the account is held in bare trust after the age of 16, any R85 would need to be cancelled and overpaid tax reclaimed on the child's behalf by the parent trustees.

izaac

Since the Will hasn't specified any age, but under 18s cannot inherit, what should we do with their share of the Estate prior to them turning 18? I'm sure we're not the first ones facing this eventuality!

I would 'get a solicitor to handle matters' if I hadn't been quoted a likely bill of £13k for what is actually quite a straight forward estate!

getmore4less

The inheritance is held in trust(the will automatically creates one) with the default trustees the executors.

Look like you need to be doing more research and potentially getting paid advice for the bits that are not actually quite straightforward.

Edit.

might be worth a second quote with you doing all the legwork enquiries etc. with the solicitors picking up some of the work as and when and helping out, like the legal work for the house sale.

£13k seems very steep I would have though <£6k for a relatively simple estate around £500k with a relative doing the enquiries, that would include any advice with the minors shares and the costs of selling a property.

SeniorSam

No question that the quotation of £13k for legal costs of dealing with the estate is well over the normal cost. Some solicitors are still of the belief that if they can get away with it they will and that is grossly unfair.

With such a simple estate the costs should be no more that £3k - 5k as there is not that much work to do. Be careful that the executors do not appoint the solicitors as executors for the children's trusts. They will take another load of money for that. The childrens funds can be set up in a building society Trust account for the
children at age 18.

Sam