Lifetime gifts and passing nil rate band query

fcandmp

I hope forum members might guide me regarding the treAtment of lifetime gifts when a nilrate band has been transferred? mum-in-law pre-deceased father-in-law by 16 months, leaving all assets to fAther-in-law. In the years subsequent to MIL's death their were joint cash gifts to children and grand children.

My question relates to the IHT403 form to be completed for FIL who has recently passed and whether during the prior 7 years we illustrate joint incomes and joint gifts, which would be a fair reflection of how things were done?

The estate valuation looks to be close to the total of the combined nilrate bands, so I want to make sure we get this right.

Many thanks

Yorkshireman99

fcandmp wrote: »

I hope forum members might guide me regarding the treAtment of lifetime gifts when a nilrate band has been transferred? mum-in-law pre-deceased father-in-law by 16 months, leaving all assets to fAther-in-law. In the years subsequent to MIL's death their were joint cash gifts to children and grand children.

My question relates to the IHT403 form to be completed for FIL who has recently passed and whether during the prior 7 years we illustrate joint incomes and joint gifts, which would be a fair reflection of how things were done?

The estate valuation looks to be close to the total of the combined nilrate bands, so I want to make sure we get this right.

Many thanks

Was probate done for MIL? That should show what joint gifts were made.

fcandmp

Hi Yorkshire99, no probate wasn't done as all assets passed to FIL well below IHT threshold.

Yorkshireman99

fcandmp wrote: »

Hi Yorkshire99, no probate wasn't done as all assets passed to FIL well below IHT threshold.

What return was made, if any, in respect of MIL?

getmore4less

I think if all within 7 years of the second death you are pretty safe at doing an initial cacluation based on all gift going back into the estate of second death with a double nil rate band.) any that are old enough to be in the 16month gap 7 years ago you should be able 1/2 and add them back.

How close is the second estate to £650 with all the gifts added back?

HMRC might want the job doing properly so that will mean doing the calculations on the first death to estabish the transferable nil rate band and then doing the second capital return for IHT on the second death.
(it amounts to the same thing the way the transferable band works when both eststae use the same band.)

once you have a reasonable idea of what the numbers might be you can ask the capital office what they want you to do.


Make sure you account for ALL the relevent reliefs you can get on gifts.
each can do £3k per year and £250pp to others not getting the £3k is a good start.

What size of gifts are we dealing with? any regular ones like every Xmas/Bday that came from income

fcandmp

Yorkshireman99, I will need to locate related paperwork as FIL dealt with probate and was Executor for MIL with solicitor's help. I will revert once I have to hand. Thanks

fcandmp

Getmore4less, thanks, excluding gifts, by my reckoning the estate is a couple of thousand over the combined nilrate band, but a significant chunk of this is the family home, for which we currently only have a provisional estimate. Gifts which are not exempt will clearly only take this further over.

The paper trail has only just commenced, so will take a few weeks to create in detail. I will be consulting the solicitor who assisted FIL tomorrow in order to see what paperwork was submitted in relation to MIL's sets ate and will hen be in a better position to respond.

Yorkshireman99

You are welcome. The solicitor may be able to help you about what can be included. As to the value of the house you need a professional valuation by a FRICS. HMR&C check valuations so getting ones from estate agents will not when close to the IHT limit. Although you can't offset the the cost directly the fees will probably save you money. In my experience HMR&C realise valuations of belongings and property is not a precise science but being too greedy by overvaluing is risky!

getmore4less

Yorkshireman99 wrote: »

You are welcome. The solicitor may be able to help you about what can be included. As to the value of the house you need a professional valuation by a FRICS. HMR&C check valuations so getting ones from estate agents will not when close to the IHT limit. Although you can't offset the the cost directly the fees will probably save you money. In my experience HMR&C realise valuations of belongings and property is not a precise science but being too greedy by overvaluing is risky!

When into IHT you want to be lowballing values not overvaluing.

Yorkshireman99

Thanks for correcting me. Brain fade!

fcandmp

I now have a few more details from how MIL's assets were handled and would appreciate member's input on next steps and how much depth of investigation is now needed to complete the NIL rate band transfer form, prior to IHT400.

an IHT205 was filed for Mum and her estate was all passed to FIL with now tax to pay. Bank account was joint at the end for her,(although she had had a sole bank account in prior six years, but all holdings were passed to joint account before she passed) and only financial asset an Isa which was transferred to FIL with help of family solicitors.

I have details of all cash gifts (from cheque book stubs for joint account) but no details of MIL's income or expenditure, as it seems FIL shredded all related records for her finances and she hadn't needed to file tax return. She certainly had state and private pension scheme income but not currently able to determine what surplus there might have been to illustrate cash gifts were from income.

From what can see from cash gifts from the joint account stubs these were very close to £8000 total per year over the last four years. There is a regular pattern of giving cash at birthdays and Christmas, but a few more sizeable gifts of max £2000 for their three children.

Question, will I need to ask the bank to provide bank statements for MIL's account, back seven years prior to her passing? In order to verify that other gifts weren't made? Also, to what extent will I be expected to require / ask the bank to provide details of payees if these details are not evident from the statements?

Many thanks