A few questions

Dr_Crypto

Hello,

My father died over the weekend. His friend is the executor and my brother and I the beneficiaries.

It is a reasonably large estate (house £600k, savings and investments £250k) and IHT will be payable.

We have been quoted £7k by "Simplify" to deal with the probate, which a solicitor friend tells me is far too much. The executor and I will attempt to deal with the probate ourselves.

We have applied for an IHT Reference number and requested final balances from the financial institutions.

1) Various items from the house are being donated to charity, including a stair lift (£4.5k), his clothes (including many high quality items), some furniture, etc. How do we value these for the IHT408 schedule and what receipts are needed?

2) How do we value the household contents for IHT407? Which single items need to be listed? Some of these are jointly owned with his friend so this will need to be recorded on the IHT407?

3) A few items of jewelry referred to in his will cannot be located in the house. It is possible that they have been sold (although no records exist and he didn't mention anything). How do we approach this situation?

4) He owed his friend around £30k for various expenses incurred (basically money he loaned her for works around the house). She has records of all this but nothing signed by him. He dealt with this debt by way of a bequest to her of £30k in the will. It would obviously be more tax efficient if the £30k was a debt against the estate and she then disclaimed her legacy. She is happy with this. How do we approach the paperwork for the debt?

5) He had agreed to pay me £5k shortly before his death to settle a lawyer bill I had incurred. Sadly he wasn't well enough to make the payment. Is it possible to register this as a debt against the estate? I am not fussed about the £5k (my brother will be fair with this) but obviously it would reduce the tax liability.

6) His car was actually owned by his friend (she has paperwork showing she paid him for it) but registered to him (some reason to do with a finance deal on purchase). We have completed the V5C to reassign it to her. How do we deal with this for IHT? How do we prove to HMRC that he only nominally owned the car?

Thanks!

da_rule

Valuations - Pay for someone to come and value the items (auctioneer/valuer). You want the sale value at the time of death rather than insurance value.

Shared items - The value of his share should be added to the estate. If he owns a table worth £1000 on a 50/50 basis then his share is £500. But ownership of the table passes to the person who owned the other half unless there is agreement otherwise.

Car - If he had use and control of the car then it is his and should be included in the calculation for IHT.

Debt (£30k) - A deed of variation disclaiming her right to the gift is needed. It is then up to the executor if he accepts the records as proof of the debt. The beneficiaries can challenge this (seems unlikely in this case).

Debt (£5k) - Again it is the decision of the executor as to whether to accept this debt based on the evidence.

Missing gifts - If the items are no longer in existence or have been disposed of during the lifetime of your father then the gift fails. If you'd like to give the person something else in its place then this can again be done with a deed of variation.

Was your father a widower? If so he may have a higher IHT nil rate band.

Dr_Crypto

Thanks!

No there will be no disputes at all between the beneficiaries and the executor/ friend.

The car was used by both him and his friend. She paid for it but he registered it.

He was a widower and so we plan to transfer my mother's unused nil rate band using IHT402. She died in 1999 and used none of her allowance.

Yorkshireman99

The £30K debt needs to be substantiated by the friend and she can claim against the estate. Forget the £5K as that is likely to be seen as a gift anyway that you need to declarte along with ant others during the last seven years. Unless therer are valuables with an individual value of £500K or more you can just put in an extimate. You will need a professional valuation of the proerty by a RICS valuer who will probably need to negotiate with the district valuer. Estate agent values are worthless in these circumstances. You need to check what, an dif, there are any nil rate releifs from your mpther's estate assuming he predecesed your father. .

da_rule

Yorkshireman99 wrote: »

Unless therer are valuables with an individual value of £500m or more

Are you sure you mean £500million?

Yorkshireman99

Thank you for correcting me. Miss Type strikes again. I shall dock her wages!

Dr_Crypto

Haha you know Miss Type as well?

There will be a few items over £500 but most are not. Is it acceptable to simply do an aggregate figure for other household contents? Say £5k?

da_rule

Dr_Crypto wrote: »

Haha you know Miss Type as well?

There will be a few items over £500 but most are not. Is it acceptable to simply do an aggregate figure for other household contents? Say £5k?

As long as this is a fair estimation of what they're worth.

securityguy

"Unless therer are valuables with an individual value of £500K or more you can just put in an extimate."

£500, not half a million. Edit out the K.

Yorkshireman99

Not to mention her sister Ms Type!

FreeBear

Dr_Crypto wrote: »

We have been quoted £7k by "Simplify" to deal with the probate, which a solicitor friend tells me is far too much. The executor and I will attempt to deal with the probate ourselves.

1) Various items from the house are being donated to charity, including a stair lift (£4.5k), his clothes (including many high quality items), some furniture, etc. How do we value these for the IHT408 schedule and what receipts are needed?

A couple of comments to the above.

Steer well clear of Simplify - They do not have a particularly good reputation and I have found them to be next to useless when I contacted them. One of their representatives was booked to pay me a visit. Waited in all day and it was a no-show. No phone call, no apology, nothing.

Stair lifts will have little residual value - They are custom built for each property, and it is highly unlikely that it would fit another house without some modifications. Likewise, chattels (even good quality clothes) will be worth very little unless they are designer label items of high desirability.