Death of 2nd parent before 1st parents assets distributed

engjan

My Mum passed away last year and although she made a will, we discovered it was invalid. Under intestacy rules, the majority of her assets went to my Dad, but a proportion was inherited by my siblings and me and we obtained probate on those grounds. My Mum's assets included some cash and the house (solely in her name). My Dad wanted to keep the cash so we agreed that when we re-registered the house my siblings and I would be named as having an interest in it. All cash assets were obtained but before we were able to deal with the house my Dad got ill and passed away.

I am now in the process of applying for probate for my Dad's estate (he had a valid will that left all his assets to my siblings and me) and I don't know how to account for the assets that he did not distribute from my Mum's estate.

Can I say that my siblings and me inherited a proportion of the house before my Dad died even if we didn't get that officially registered?

If not then should I include the value of my Mum's estate that my siblings and I inherited as a debt to be paid out of my Dad's estate?

Or do I just ignore it and complete the forms as if my Dad had inherited all of my Mum's estate?

Note that this is a question about the probate forms only, as the value of inheritance in both cases is below the excepted estate.

Thanks in advance to anyone who can help me with this.

NordicNoir

engjan wrote: »

My Mum passed away last year and although she made a will, we discovered it was invalid. Under intestacy rules, the majority of her assets went to my Dad, but a proportion was inherited by my siblings and me and we obtained probate on those grounds. My Mum's assets included some cash and the house (solely in her name). My Dad wanted to keep the cash so we agreed that when we re-registered the house my siblings and I would be named as having an interest in it. All cash assets were obtained but before we were able to deal with the house my Dad got ill and passed away.

I am now in the process of applying for probate for my Dad's estate (he had a valid will that left all his assets to my siblings and me) and I don't know how to account for the assets that he did not distribute from my Mum's estate.

Can I say that my siblings and me inherited a proportion of the house before my Dad died even if we didn't get that officially registered?
Yes, it is the beneficial ownership that is important.

If not then should I include the value of my Mum's estate that my siblings and I inherited as a debt to be paid out of my Dad's estate?

Or do I just ignore it and complete the forms as if my Dad had inherited all of my Mum's estate?
No, you should show what your father had inherited under the intestacy rules. The fact that it was not complete does not matter.

Note that this is a question about the probate forms only, as the value of inheritance in both cases is below the excepted estate.

Thanks in advance to anyone who can help me with this.

Please see notes above.

Just to double check my understanding...
Your father inherited everything from your mother except a percentage of the house? Is that correct? If so, just include the percentage of the value of the house that your father owned on the probate forms.

engjan

Not exactly. My Dad inherited the first £250k of my Mum's estate plus 50% of the excess, with my siblings and me inheriting the other 50%. Intestacy rules just deal with the value of the estate, not specific assets like the house. How the estate was divided was up to my Dad, my siblings and me. My siblings and I could have had cash from the estate and my Dad the house in it's entirety. It was Informally agreed that my siblings and my proportion would be 'taken' from the house and not out of my Mum's cash assets.

NordicNoir

engjan wrote: »

Not exactly. My Dad inherited the first £250k of my Mum's estate plus 50% of the excess, with my siblings and me inheriting the other 50%. Intestacy rules just deal with the value of the estate, not specific assets like the house. How the estate was divided was up to my Dad, my siblings and me. My siblings and I could have had cash from the estate and my Dad the house in it's entirety. It was Informally agreed that my siblings and my proportion would be 'taken' from the house and not out of my Mum's cash assets.

That's fine, I understood the intestacy bit but just wanted to be sure that the actual way that the estate was distributed was that your dad took on everything, other than the childrens share of the house.

In that case, as previously mentioned, you just need to show the percentage value of the house that your father owned, on the form.

Yorkshireman99

engjan wrote: »

My Mum passed away last year and although she made a will, we discovered it was invalid. Under intestacy rules, the majority of her assets went to my Dad, but a proportion was inherited by my siblings and me and we obtained probate on those grounds. My Mum's assets included some cash and the house (solely in her name). My Dad wanted to keep the cash so we agreed that when we re-registered the house my siblings and I would be named as having an interest in it. All cash assets were obtained but before we were able to deal with the house my Dad got ill and passed away.

I am now in the process of applying for probate for my Dad's estate (he had a valid will that left all his assets to my siblings and me) and I don't know how to account for the assets that he did not distribute from my Mum's estate.

Can I say that my siblings and me inherited a proportion of the house before my Dad died even if we didn't get that officially registered?

If not then should I include the value of my Mum's estate that my siblings and I inherited as a debt to be paid out of my Dad's estate?

Or do I just ignore it and complete the forms as if my Dad had inherited all of my Mum's estate?

Note that this is a question about the probate forms only, as the value of inheritance in both cases is below the excepted estate.

Thanks in advance to anyone who can help me with this.

Who obtained LOA for your late mother's estate? The executor would be required to distribute the estate according to the intestacy rules unless a deed of variation was done to alter the distribution. So it seems you have essentially just a paper transaction and assuming there is no IHT payable include the house in the value of your late father's estate

getmore4less

Since the cash requirements are no longer needed might be easier to just distribution cash from mums estate and deal with what's left as dads especially if the house shares will end up the same if keeping it if selling it will all turn to cash.

Also removes any CGT complications between the deaths.

NordicNoir

getmore4less wrote: »

Since the cash requirements are no longer needed might be easier to just distribution cash from mums estate and deal with what's left as dads especially if the house shares will end up the same if keeping it if selling it will all turn to cash.

Also removes any CGT complications between the deaths.

That is an excellent point!

engjan

Indeed it is!

I think the conclusion is that there is no advantage to accounting for this as a share of the house. I'll account for it as cash and add it as a debt to his estate.

Thank you all so much for your help.

Yorkshireman99

engjan wrote: »

Indeed it is!

I think the conclusion is that there is no advantage to accounting for this as a share of the house. I'll account for it as cash and add it as a debt to his estate.

Thank you all so much for your help.

You would be wise to seek paid for professional advice just to be sure there are no pitfalls. Making a wrong declaration on the probate forms might cause problems for the recipients in establishing a correct base price for futurte CGT purposes,

NordicNoir

Yorkshireman99 wrote: »

You would be wise to seek paid for professional advice just to be sure there are no pitfalls. Making a wrong declaration on the probate forms might cause problems for the recipients in establishing a correct base price for futurte CGT purposes,

As both estates are under the IHT limit, the probate value of the house is not ascertained by HMRC and can effectively be revised in the CGT calculation, if it is later discovered to be incorrect. The important value, in this case, is the market value at the date of death.

Yorkshireman99

MichelleUK wrote: »

As both estates are under the IHT limit, the probate value of the house is not ascertained by HMRC and can effectively be revised in the CGT calculation, if it is later discovered to be incorrect. The important value, in this case, is the market value at the date of death.

Exactly! So the OP needs to get a valuation done by a RICS or equivalently qualified surveyor. Otherwise any future base CGT value will be the probate value.