Inheritance ISA Allowance

Windsor_Lad

My wife and I have everything in joint names to avoid the need for a Grant of Probate on first death. ISA's can't be held in joint names but can now be inherited by a spouse. Will ISA Providers require a Grant of Probate before transferring ISA's from a deceased spouse?

eskbanker

ISAs aren't actually transferred as such under this arrangement - the surviving spouse acquires an Additional Permitted Subscription equivalent in value to the original ISA, rather than the money itself being transferred.

As I understand it, the ISAs of the deceased are closed and the value becomes part of the estate, so the inheritance would effectively be in cash form rather than within an ISA, and there is then room created for the surviving spouse to put it back into ISAs should they choose to do so (or they could fund ISAs with the APS value without actually inheriting the money as such).

Further details (and plenty of them!) at https://www.gov.uk/guidance/manage-additional-permitted-subscriptions-into-an-isa

Alexland

Yup that's my understanding too. It looks like Nationwide may be particularly helpful in this situation. Once the money is ISA wrapped again you can transfer it to whoever has the best rates, etc.

https://www.nationwide.co.uk/support/support-articles/manage-your-account/isa-inheritance/

Alex.

Windsor_Lad

Looks like your advice suggests that the only way to avoid a Grant of Probate on first death is to move all of our savings out of ISA's and into a savings account such as NS&I

Alexland

Windsor_Lad wrote: »

Looks like your advice suggests that the only way to avoid a Grant of Probate on first death is to move all of our savings out of ISA's and into a savings account such as NS&I

But then you would no longer have the Additional Permitted Subscription as the money was not ISA wrapped on death. You would still be able to ISA wrap the money at £20k PA and, assuming you are not earning and under 75, pension wrap money at £2,880 PA. Is there any particular reason you are seeking to avoid probate?

Alex

Windsor_Lad

I am just trying to make life easier for my wife ( assuming I die first) so that she can avoid the hassle of getting a Grant of Probate.

Reed_Richards

It's really not that much hassle.

James145

I understand why you would want to avoid the hassle and cost of applying for a Grant of Probate, but it depends how much money you have in the ISAs.

You don't want to transfer the monies into joint names if you have a large amount, as your wife will then have to pay tax on any interest earned. Furthermore, if you plan to invest the monies in a joint investment account, your wife will then have to pay CGT on any gains on the funds, which could be significant. It may therefore be worth getting a Grant of Probate, so your wife can "keep" the monies in an ISA wrapper.