Tiny probate/inheritance tax questions

HelenFlowers

Hello,

Having been inspired encouraged and guided by all the excellent advice on DIY probate here, I am executor for my mother's estate.

I have explored every forum I can find, and cannot find a really basic list of the process, thus asking the very nice people here:

Do I have to set up a separate bank account to deal with probate issues? Is it advisable?
I know I can charge funeral costs before inheritance tax, what else?
Can I account for the following before IHT:

The house running costs (insurance, electricity, etc) between death and probate?
Entertainment, printing, postage and flowers around the funeral?
The sale costs of the house ?
If I pay for help, can I charge that?
Anything else I might not have thought of?

For background, We have a house, and bank savings, which takes us just over the inheritance tax threshold (combined, dad already passed on, did his then it was easy as all co-owned). They worked hard and saved a lot to pass on to us three, and the six grandchildren, and I am eternally grateful as there is no other money in the family (Although I wish they had spoiled themselves a little bit more).

Most grateful

Yorkshireman99

You cannot claim the house running costs or sale costs in valuing the estate for probate. Reasonable funeral costs are allowable. You cannot deduct costs for professional advice from the probate value but they are chargeable against the estate before distribution.. A separate bank account may not be needed but if you receive cheques made out to the executors then you will need one. The house value at the date of death is best established by getting a formal valuation by a RICS member Estate agents values will not do.

Keep_pedalling

It is not compulsory to have a seperate bank account, but with a large estate is is advisable to do so, unless as well as being executor you also happen to be the sole beneficiary.

IHT is based on the value of the estate at the time of death and apart from funeral costs the only other thing that can be deducted is bequests charities and political parties.

As the estate is close to the IHT threshold you should also get a proper valuation on the house from a chartered surveyer to avoid a challenge from HMRC or over estimating the value and paying more tax than you should do (estate agent valuations can be some way off the true value).

wwl

Keep_pedalling wrote: »

As the estate is close to the IHT threshold you should also get a proper valuation on the house from a chartered surveyer to avoid a challenge from HMRC or over estimating the value and paying more tax than you should do (estate agent valuations can be some way off the true value).

Even then they may ask the district valuer to value property after Probate is granted.
Bear in mind that if a property is to be sold, over-valuation is not necessarily a problem as if it sells for less you can recover the IHT on the difference.
As regards an executor account it's mostly down to how many sources of funds there are, to make it easy to keep track of everything. The issue of cheques can often be worked around - anything made out to "the executor" should be payable into the executor's personal account if the bank are shown the paperwork. And many payments these days are via BACs, where the name doesn't matter.

Yorkshireman99

Keep_pedalling wrote: »

It is not compulsory to have a seperate bank account, but with a large estate is is advisable to do so, unless as well as being executor you also happen to be the sole beneficiary.

IHT is based on the value of the estate at the time of death and apart from funeral costs the only other thing that can be deducted is bequests charities and political parties.

As the estate is close to the IHT threshold you should also get a proper valuation on the house from a chartered surveyer to avoid a challenge from HMRC or over estimating the value and paying more tax than you should do (estate agent valuations can be some way off the true value).

Legacies to Political parties are not deductable.

Keep_pedalling

Yorkshireman99 wrote: »

Legacies to Political parties are not deductable.

They are according to HMRC

https://www.gov.uk/inheritance-tax/gifts

Yorkshireman99

Gifts pre death can be deducted. Legacies cannot. Happy to be corrected if I am wrong.

HelenFlowers

Many thanks - I suspected as much but couldn't find anything definitive. Should have come here first.

No political donations will be made.

Yorkshireman99

HelenFlowers wrote: »

Many thanks - I suspected as much but couldn't find anything definitive. Should have come here first.

No political donations will be made.

You need to read the HMR&C notes on filling out the forms carefully Gifts made by the deceased in the last seven years may need to be added to the value for probate. Also note the six month limit for probate application and that payment of the IHT has to be made with the application. Assuming there are sufficient funds the bank should be able to give you cheque. Also note there are circumstances where payment can be deferred.

HelenFlowers

Very helpful, thank you.

EasySolution

Inheritance Tax Act 1984 s24 states quite clearly that a gift to a qualifying Political Party is exempt.