Probate and inheritance tax query

troubleinparadise

A Deed of Variation now wouldn't alter the fact that I have to pay inheritance tax.

What I don't understand is if you do a Deed of Variation to show that you're not keeping all the money, why aren't you then exempt from IHT, or least get it refunded later? I will, in effect, only be a filter for a lot of the money being transferred on to other relatives.

It is the estate that is being charged the tax, not the beneficiary. It makes no difference who the beneficiary is.

You, as the executor, pay the tax owed to HMRC by the estate, on behalf of the estate, from the estate funds, not from your personal funds.

Keep_pedalling

The DoV may have an impact on the IHT your estate has to pay when you die, but makes no difference to your mother's estate.

mothballs39

Hi, I have a further question! Probate planning is going well and I now have a solicitor lined up for the conveyancing and any probate problems. What I need to know involves the "possessions" section of IHT 400.

If something (i.e. a collection) is left in a will to someone, does it have to be included under the "possessions" section? Or does the fact that it has been left in the will free of taxes, inheritance tax etc, mean that the collection doesn't need to be given a value? We're talking a one off collection that can't be replaced, but nothing particularly valuable, mostly foreign tat gathered whilst on holiday

g6jns_2

mothballs39 wrote: »

Hi, I have a further question! Probate planning is going well and I now have a solicitor lined up for the conveyancing and any probate problems. What I need to know involves the "possessions" section of IHT 400.

If something (i.e. a collection) is left in a will to someone, does it have to be included under the "possessions" section? Or does the fact that it has been left in the will free of taxes, inheritance tax etc, mean that the collection doesn't need to be given a value? We're talking a one off collection that can't be replaced, but nothing particularly valuable, mostly foreign tat gathered whilst on holiday

Yes you do have include the value. The value has to be a reasonable one that you can substantiate if HMR&C ask for details. Unless the estate value is close to, or above, the IHT threshold they will not be bothered. Just remember that as executor you are personally liable for any mistakes.

mothballs39

g6jns wrote: »

Yes you do have include the value. The value has to be a reasonable one that you can substantiate if HMR&C ask for details. Unless the estate value is close to, or above, the IHT threshold they will not be bothered. Just remember that as executor you are personally liable for any mistakes.

Oh jeez. I've no way of being able to check prices for the whole collection. I have a few I found selling on ebay but how I find the price of one item she bought 30 years ago in Bermuda is anyone's guess! I'll just have to do a guesstimate. Unfortunately, I'm way over the inheritance tax threshold as well. :mad:

FreeBear

The value of any items is what it would expect to sell for on the open market at the time of death. This is not the same as an insurance value, the amount it cost to originally purchase, or any sentimental value.

I had to get some jewellery valued recently - For insurance purposes, it was over £10,000 of gold rings & broaches. For probate, it came in at just under £2,000 - In effect the scrap value of the metal plus a bit for the stones.

For a collection of "trinkets", find a few similar items on ebay, grab a screen shot of the sales when they are sold and use that as a guide for the rest of the collection. Alternatively, contact a local auction house and get them to do a probate valuation of the collection and any chattels - You may be shocked at the low value they place on the stuff.

mothballs39

FreeBear wrote: »

The value of any items is what it would expect to sell for on the open market at the time of death. This is not the same as an insurance value, the amount it cost to originally purchase, or any sentimental value.

I had to get some jewellery valued recently - For insurance purposes, it was over £10,000 of gold rings & broaches. For probate, it came in at just under £2,000 - In effect the scrap value of the metal plus a bit for the stones.

For a collection of "trinkets", find a few similar items on ebay, grab a screen shot of the sales when they are sold and use that as a guide for the rest of the collection. Alternatively, contact a local auction house and get them to do a probate valuation of the collection and any chattels - You may be shocked at the low value they place on the stuff.

That's useful to know, thanks Freebear.