IHT400 - Property in a trust

Miffster

I have an IHT400 dilemma which I'm having trouble getting my head around, and wonder if anyone has any thoughts..
My parents owned a house as tenants in common. My mother died in 2015 and in her will her half-share of the house was held in Trust for the benefit of my father as a Life Tenant, free of charge (or to receive the income if it was sold etc but he lived there until he died). This Trust ceased upon my father's death in late 2017 and we're now applying for his probate, having previously received it for my mother. My sister and I were both Trustees and executors of my mother's estate and we are now the executors of my father's estate. Since the Trust ended my sister and I are now the only beneficiaries of both estates.

Based on the circumstances and value of the estate IHT205 would have been applicable except for the fact that the half-share of the house (in Trust) is worth more than £150,000, therefore IHT400 is required (including IHT418 detailing the Trust). My question is in IHT400 should the house be treated as a 'Jointly Owned Asset' (IHT404) because of the half share in Trust; or should the house be treated as my father's sole property (IHT405) because he was the sole beneficiary of the trust?

Yorkshireman99

Miffster wrote: »

I have an IHT400 dilemma which I'm having trouble getting my head around, and wonder if anyone has any thoughts..
My parents owned a house as tenants in common. My mother died in 2015 and in her will her half-share of the house was held in Trust for the benefit of my father as a Life Tenant, free of charge (or to receive the income if it was sold etc but he lived there until he died). This Trust ceased upon my father's death in late 2017 and we're now applying for his probate, having previously received it for my mother. My sister and I were both Trustees and executors of my mother's estate and we are now the executors of my father's estate. Since the Trust ended my sister and I are now the only beneficiaries of both estates.

Based on the circumstances and value of the estate IHT205 would have been applicable except for the fact that the half-share of the house (in Trust) is worth more than £150,000, therefore IHT400 is required (including IHT418 detailing the Trust). My question is in IHT400 should the house be treated as a 'Jointly Owned Asset' (IHT404) because of the half share in Trust; or should the house be treated as my father's sole property (IHT405) because he was the sole beneficiary of the trust?

What is the total value of the two estates. It sounds as though no IHT is payable because you can transfer any unused allowances from you mother to your father. Someone else will be along shortly to say more.

Miffster

Yes, I believe no IHT is payable, but IHT400 is required only because of the Trust.

Yorkshireman99

Miffster wrote: »

Yes, I believe no IHT is payable, but IHT400 is required only because of the Trust.

Noted. It might be worth asking HMR&C for guidance.

Miffster

I contacted the Gov probate/IHT helpline (0300-123-1072) and got through within 5 minutes, quicker than I expected. They said we should treat the house as a jointly owned asset (IHT404) half owned by the Trust and half owned by my father. Thanks for the comments above.

getmore4less

read up on IPDI trust taxation

That might guide to the correct IHT400 form(s)

badger09

Miffster wrote: »

I contacted the Gov probate/IHT helpline (0300-123-1072) and got through within 5 minutes, quicker than I expected. They said we should treat the house as a jointly owned asset (IHT404) half owned by the Trust and half owned by my father. Thanks for the comments above.

Miffster

Thank you so much for posting your original question and especially for posting this update.

I was facing exactly the same dilemma in relation to probate application for my late sister's estate. In fact, I'd drafted my question earlier today but decided to read through the last few pages first.

I'd actually come to the right conclusion, but its so nice to have confirmation.

Good luck with the application - mine has taken me 2 full days so far:o