Property Inheritance Question

Tom99

getmore4less wrote: »

There are rules for how all this gets done,

look up abatement will help understand the order that legacies get reduced when insufficient exist to cover them all.

[FONT=Verdana, sans-serif]Thank you, I had not heard of that term before and have now looked it up.[/FONT]

Tom99

Yorkshireman99 wrote: »

Tom is asking theoretical questions. He should instead be doing as per post #8. The main purpose of this forum is to try and help real people solve real problems not as tutorial.

[FONT=Verdana, sans-serif]The OP's question was theoretical “for example a house” not a real problem. Even if it was real, me trying to expand the question with an example can only help get a more detailed reply for the OP, me and anyone else who reads the post.[/FONT]

Jenniefour

Tom99 wrote: »

[FONT=Verdana, sans-serif]The OP's question was theoretical “for example a house” not a real problem. Even if it was real, me trying to expand the question with an example can only help get a more detailed reply for the OP, me and anyone else who reads the post.[/FONT]

I suspect OP's post isn't theoretical at all, there's far too much detail in it.

However, the difficulty with other readers popping in with more than the very occasional clarification question is that it effectively hijacks OP's thread and may give the impression to the OP that otherwise sound advice is questionable or, worse still, plain wrong - I don't think that's helpful at all and can lead to confusion for the OP. Remember, we know each other on here, so to speak, but those posting problems often have no idea who's who on here unless they themselves are regular readers/responders on this board and most people who post difficulties on here are not. Since the main purpose of this board is to try and help the OP's, let's not confuse OP's by letting our own need/desire to satisfy our curiosity/build on our knowledge get in the way - their need to get some useful guidance is surely much more important. And there are other ways of finding things out without putting questions in which hijack a thread.

OP, I've also hijacked your thread - sorry!

Yorkshireman99

Jenniefour wrote: »

I suspect OP's post isn't theoretical at all, there's far too much detail in it.

However, the difficulty with other readers popping in with more than the very occasional clarification question is that it effectively hijacks OP's thread and may give the impression to the OP that otherwise sound advice is questionable or, worse still, plain wrong - I don't think that's helpful at all and can lead to confusion for the OP. Remember, we know each other on here, so to speak, but those posting problems often have no idea who's who on here unless they themselves are regular readers/responders on this board and most people who post difficulties on here are not. Since the main purpose of this board is to try and help the OP's, let's not confuse OP's by letting our own need/desire to satisfy our curiosity/build on our knowledge get in the way - their need to get some useful guidance is surely much more important. And there are other ways of finding things out without putting questions in which hijack a thread.

OP, I've also hijacked your thread - sorry!

You have not hijacked the thread! You have made some important points. The difficulty with the this forum is that quite small differences can completely change a situation and the unwary can draw completly wrong conclusions. That is why it is much better to start a new thread rather than hijacking an existing thread. At the very least people should read the stickies" before posting. As far as hypothetical questions are concerned I personally prefer to give piority to real questions. With the powers of Google, and other search engines can provide many answers to basics. Also don't neglect textbooks or specific websites like Which, Citizens Advice or Age Concern.

nom_de_plume

greatnewseverybody wrote: »

Apologies, very new to trying to understand this complicated matter!
My question is that if you have been named specifically to inherit something from a will, for example a house, but there are other people who will be receiving other smaller elements (mainly cash gifts) as well, what happens if the estate needs to sell the house (the estate would be well over £325,000) to be able to afford to pay the inheritance tax? Does the property get sold, all the bills, debts etc get paid, then the cash inheritance stated in the Will get paid out, then whatever is left go to the person who was originally stated to inherit the property? Really not sure how this works.
Thanks,
Paul

Back to the original question.

As I understand it, using the rules of abatement, all the legacies other than the house will fail as there is insufficient money in the estate to distribute them. This would leave the house which would have to be sold to fund the IHT shortfall with any surplus after payment of the IHT going to the intended recipient of the house (or the recipient could inject cash to fund the shortfall and keep the house).

To slightly complicate this, if there are other SPECIFIC legacies (such as My Car, My Wedding Ring) then they would have to have their values added together with the house value and then reduced by a like percentage to reach their distributable worth. This may mean if say the recipient of the house actually wanted the house, they would have to inject some cash into the equation and similarly the recipients of other specific items..

Cash legacies such as £1,000 to Mrs Jones next door fall lower down the pecking order in these situations and sadly Mrs. Jones gets nothing.

If there is some cash left over and the house can be given to the intended beneficiary in total, cash beneficiaries get their legacies reduced but the house goes 100% to it's recipient.

Tom99

[FONT=Verdana, sans-serif]After looking up 'Abatement' it seems the order in which debts of an estate are paid is set out in Administration of Estates Act 1925 Schedule 1.

https://www.legislation.gov.uk/ukpga/Geo5/15-16/23/schedule/FIRST/part/II

Some of the meaning is unclear to me but I think:

1 – Residue estate
2/3/4 – Not sure
5 – Cash
6 – Specific legacies e.g. property, ring
7 – Not sure

[/FONT] [FONT=Verdana, sans-serif]Edit: Link now updated[/FONT]

getmore4less

That link is not the uptodate version.

8(b) was repealed.