Probate and inheritance tax query

mothballs39

Hi, my father died in 2009 and my mother died a few days ago I have a couple of questions re probate. My mother left a will and I am now the sole executor.

If a precise amount of money is left to me in the will, can I deduct that money from the estate when finalising probate? Or as I'm inheriting virtually everything anyway, would that allowance be ignored? The reason I ask is that we're perilously close to having to pay inheritance tax but if I can deduct from the value of the estate the money I've been bequeathed directly we should be ok.

Also, a sum was left to another relative but there was a verbal agreement between them, my mother and I that the amount would be increased x5 on her death, but there's nothing in writing about this. Could I deduct the x5 figure from the total estate, or would only the original sum mentioned in the will be accepted when probate is assessed?

Last question (for now) would it be accepted on the probate form that I'm increasing another payment x 10 to a relative (now a student and needing the money!). The relative was a small child when the will was originally written. I am paying this anyway, but it's more a matter of will it be accepted as an allowance on the probate form, or would I just have to pay it myself afterwards.

All basically related to reducing the risk of inheritance tax

I know that I have to complete a nil band request form for my father's estate but it's all a little daunting!

Thank you in advance for your help.

wwl

The estate value for probate is the assets minus debts at the time of death, less funeral expenses. Nothing in the Will affects that.

mothballs39

Oh, now I'm really confused. I thought you had to deduct the amount going to beneficiaries from the estate? If not we're really in trouble!:eek:

Keep_pedalling

No one who is effected by IHT is in trouble, after all they are still going to be getting a large amount of money.

How far over the limit do you think you are?

RAS

You identify the full value of the estate. Identify any debts (unpaid utility bills, over paid pensions, credit cards etc) and deduct them from the sum.

Then deduct the IHT allowance including any nil band allowance re the first death. The estate pays IHT to the HMRC based on 40% of the "excess".

Expect DWP to want to assess for any over-payments.

Pay out all specific bequests to beneficiaries. Then sort out the residual estate. if you think that there is enough in the estate for the residual sum to cover any DWP and HMRC liabilities, you could pay out the specific bequests early or make partial payments.

We paid out 90% and then adjusted the accounts later.

mothballs39

Keep_pedalling wrote: »

No one who is effected by IHT is in trouble, after all they are still going to be getting a large amount of money.

How far over the limit do you think you are?

5 figures probably.

wwl

RAS wrote: »

You identify the full value of the estate. Identify any debts (unpaid utility bills, over paid pensions, credit cards etc) and deduct them from the sum.

And deduct funeral expenses

G6JNS

mothballs39 wrote: »

Hi, my father died in 2009 and my mother died a few days ago I have a couple of questions re probate. My mother left a will and I am now the sole executor.

If a precise amount of money is left to me in the will, can I deduct that money from the estate when finalising probate? Or as I'm inheriting virtually everything anyway, would that allowance be ignored? The reason I ask is that we're perilously close to having to pay inheritance tax but if I can deduct from the value of the estate the money I've been bequeathed directly we should be ok.

Also, a sum was left to another relative but there was a verbal agreement between them, my mother and I that the amount would be increased x5 on her death, but there's nothing in writing about this. Could I deduct the x5 figure from the total estate, or would only the original sum mentioned in the will be accepted when probate is assessed?

Last question (for now) would it be accepted on the probate form that I'm increasing another payment x 10 to a relative (now a student and needing the money!). The relative was a small child when the will was originally written. I am paying this anyway, but it's more a matter of will it be accepted as an allowance on the probate form, or would I just have to pay it myself afterwards.

All basically related to reducing the risk of inheritance tax

I know that I have to complete a nil band request form for my father's estate but it's all a little daunting!

Thank you in advance for your help.

As other have said you have to enter the full value of the estate onto the probate forms. That is less any debts such as utility bills etc. and the funeral expenses. Once everything is finalized and any IHT is paid the executor has to distribute the estate exactly as per the will. The executor has no discretion to do otherwise. The only way that the amounts can be varied is deeds of variation to alter the amounts. It sounds as if you might be well advised to get some professional advice rather than relying on this group.

mothballs39

G6JNS wrote: »

As other have said you have to enter the full value of the estate onto the probate forms. That is less any debts such as utility bills etc. and the funeral expenses. Once everything is finalized and any IHT is paid the executor has to distribute the estate exactly as per the will. The executor has no discretion to do otherwise. The only way that the amounts can be varied is deeds of variation to alter the amounts. It sounds as if you might be well advised to get some professional advice rather than relying on this group.

Yes I'm beginning to think so. I should add that I am the main beneficiary, as well as the executor. The other two beneficiaries are close family who would be benefiting from the extra payments from me, so it's not like there will be other family members who will dispute who gets what. I might see if I can get a free half hour solicitor's visit

G6JNS

mothballs39 wrote: »

Yes I'm beginning to think so. I should add that I am the main beneficiary, as well as the executor. The other two beneficiaries are close family who would be benefiting from the extra payments from me, so it's not like there will be other family members who will dispute who gets what. I might see if I can get a free half hour solicitor's visit

It may well be that few hundred pounds extra will save you far more by getting the probate application correct first time. If you make payment from your own account remember that this may well have an effect on IHT on your own estate in due course. If DOVs can be done the this will be avoided.

getmore4less

Spend more time researching and get help.

Depending on how your fathers estate was distributed you may have upto £650k nil rate allowance to work with

get the IHT 205 and IHT400 form set read through ALL of them and any notes to get an idea of what you are dealing with before getting advise, going in blind will waste time.

you will also probably need to get advise on the wording of the will to make sure you understand if any need to take any IHT due into account or need any grossing up.