Executors expenses, 10% charity bequest

Linton

I would be very grateful if anyone knows the definitive answer to......
The will states that 10% is to be given to charity which leads to use of the 36% IHT rate. In calculating the 10% how are non-funeral expenses handled? For example minor repairs to house and insurance before completion of sale, house clearance, press announcement of death etc etc. Is the 10% calculated before or after these expenses?

Yorkshireman99

Linton wrote: »

I would be very grateful if anyone knows the definitive answer to......
The will states that 10% is to be given to charity which leads to use of the 36% IHT rate. In calculating the 10% how are non-funeral expenses handled? For example minor repairs to house and insurance before completion of sale, house clearance, press announcement of death etc etc. Is the 10% calculated before or after these expenses?

AIUI those expenses are effectively deducted from what the residuary beneficiary receives because they relate to the administration of the estate. However I am happy to be corrected.

Linton

Yorkshireman99 wrote: »

AIUI those expenses are effectively deducted from what the residuary beneficiary receives because they relate to the administration of the estate. However I am happy to be corrected.

Is the charity considered to be a residuary beneficiary? Their portion is expressed as 10% so presumably they should be, on the other hand perhaps the 10% rule requires it to be 10% of the post funeral estate.

getmore4less

You have to be really careful on interpretation of the will.

you might need to post in more detail

it is really easy to get it wrong and NOT qualify for the reduced IHT rate.

Look at the examples in the HMRC manual they will give you a better idea of how to do the calculations and see if the will qualifies.

try here
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm45000

Yorkshireman99

The OP cannot afford to rely just on advice from here. If they are in doubt they need to ask an accountant because HMR&C are notorious for making it up as they go along.

getmore4less

The OP needs to familiarise themselves with the basics first if they want to deal with the estate and IHT.

Yorkshireman99

They need much more than the basics. The rules are complex and unless one of the examples fits perfectly then a layman can easily get it wrong.