Transfers to Spouse on Death

Newcomer1234

Hi

Please can somebody more knowledgeable help me?
Dad has just died. Stepmum, brother and I are the Executors. We are agreed I should try to resolve the IHT and Probate issues rather than buying a solicitor a new car.

The estate is borderline for IHT (depends on the final values for some of the bits)

Looking at the IHT forms on HMRC's website I can't see how to show that my stepmum is going to get 25% of the pot, but I thought that transfers to a spouse were exempt from IHT....and it could make a big difference to the tax paid.

Obviously these are not my numbers, just an example.

Dad left £350,000 in the bank. Nothing else. IHT allowance £325,000
Putting the figures on the form it looks like we would pay tax on £25,000

But if 25% goes to stepmum and is exempt should it be £350,000 less £87,500, (her 25%) which would mean none is payable?

Obviously I am being really thick here so please be gentle with me!



Thanks in advance

Misslayed

It's a few years since we had to deal with a similar situation, we found the people at the probate helpline were very knowledgeable, helpful and patient, they talked us through the trickier bits of the forms. Worth a call.

Newcomer1234

Hi and thanks for replying.
Stepmum called Probate office for help on a different issue and found local office really helpful.

But, I thought I had to complete the IHT forms first - and cough up the tax before I went to the probate office. Did I misunderstand this?

I really don't want to pay a solicitor to do this because although there is a fair bit of money in the pot - its all in the bank and should be really easy to sort as the will is really clear and simple.

Keep_pedalling

Based on you figures there will be no IHT to pay. Everything left to a spouse is exempt and as the remainder is under his nil rate band the IHT liability is zero.

As the estate is cash only it should be simple to administer and you should not need to employ a solicitor. When you work through form IHT205 you will see that provided the gross estate less any bequests to a spouse or charity is below the nil rate band then you are OK.

Do not forget to account for any gifts above the annual £3000 allowance that he may have given in the past 7 years.

Tom99

[FONT=Verdana, sans-serif]Fill in form IHT205 as follows, fill in the .PDF form on your computer:[/FONT]
[FONT=Verdana, sans-serif]
[/FONT][FONT=Verdana, sans-serif]Page 4 11.1 Cash in Bank = £350,000[/FONT]
[FONT=Verdana, sans-serif]Page 5 Boxes D,F,G&H Gross Value for Grant etc = £350,000 will automatically populate.[/FONT]
[FONT=Verdana, sans-serif]Page 7 Box J Amount to spouse = £87,500[/FONT]
[FONT=Verdana, sans-serif]Page 7 Box K net qualifying value = £262,500 will automatically populate.[/FONT]
[FONT=Verdana, sans-serif]
[/FONT][FONT=Verdana, sans-serif]Its only 11.1 and Box J you need to fill in all the other figures will automatically be filled in for you.[/FONT]

badger09

Newcomer1234 wrote: »

Hi

Please can somebody more knowledgeable help me?
Dad has just died. Stepmum, brother and I are the Executors. We are agreed I should try to resolve the IHT and Probate issues rather than buying a solicitor a new car.

The estate is borderline for IHT (depends on the final values for some of the bits)

Looking at the IHT forms on HMRC's website I can't see how to show that my stepmum is going to get 25% of the pot, but I thought that transfers to a spouse were exempt from IHT....and it could make a big difference to the tax paid.

Obviously these are not my numbers, just an example.

Dad left £350,000 in the bank. Nothing else. IHT allowance £325,000
Putting the figures on the form it looks like we would pay tax on £25,000

But if 25% goes to stepmum and is exempt should it be £350,000 less £87,500, (her 25%) which would mean none is payable?

Obviously I am being really thick here so please be gentle with me!



Thanks in advance

Condolences on your loss.

Sorry, but if there are 'bits' to be valued, then why do you say 'nothing else'? It would be an unusual situation to have £350k in cash savings and nothing else.

Was there no house/flat? Car?

Owain_Moneysaver

Those were example figures, not the actual ones.

The relevant helpline is HMRC Inheritance Tax and Probate, not the Probate Registry

Telephone:
0300 123 1072

Outside UK:
+44 300 123 1072

Opening times:
Monday to Friday: 9am to 5pm

Newcomer1234

Hi
Sorry if I confused things.
His assets are a few shares, very healthy bank balance, NS and I bonds and a few premium bonds. Some will have to be valued as of day before he died but we have a pretty good idea how much.

He sold his house and moved in with step mum. Didn't have his own car (shouldn't have been driving anyway!). Nothing else of any value.

Tom99

On IHT205 Box 11.1 for bank balance, NS&I bonds and premium bonds.
Box 11.3 for shares. Remember to add the dividend due for any which were ex-div but not yet paid.

nom_de_plume

Just to digress slightly...


If the relationship with stepmum is sound, could the other beneficiaries use a DOV to leave the whole estate to her to avoid any IHT and she then simply gifts the other legacies in the hope of surviving at least another 7 years? Too simple or am I missing something?

Tom99

nom_de_plume wrote: »

Just to digress slightly...
If the relationship with stepmum is sound, could the other beneficiaries use a DOV to leave the whole estate to her to avoid any IHT and she then simply gifts the other legacies in the hope of surviving at least another 7 years? Too simple or am I missing something?

Using the OP's figure there will be no IHT to pay but, if there was, your suggestion will work and the surviving spouse will inherit another £325k nil rate band and the eventual £175k residential nil rate band.