RNRB/IHT Query

PollardUK

getmore4less wrote: »

it reads like there is none but can we clarify there was no life interest?

If there is the numbers change a lot

HI getmore4less,
No, there is no Life Interest involved,

kind regards

Tim

PollardUK

Hi All,
Many thanks to Savvy_Sue, Tom99, Yorkshireman99, Keep pedalling, and getmore4less, for all of your replies/input.
I was hoping that as Mom wouldn't be disadvantaged by swapping out cash for property, and that her Total Estate Value would remain the same, that it would be allowable, but I can see the point raised by Savvy_Sue,

kind regards

Tim

Tom99

PollardUK wrote: »

Hi Tom99,
We're unsure of the House price until we get an accurate valuation done, but we're looking at a worst case scenario price of £300,000 (total price, so yes, Moms share would be £150,000 at this value).
kind regards
Tim

Since your mother can use your father's RNRB you mother already has a £250k RNRB allowance, of which it seem you will only be able to use max £300k/2=£150k so plenty of headroom, and no point getting any sort of formal valuation now since you will need another one for your mother's probate application as at the date of death.

Also when the time comes the open market value of a 50% share is not always 50% of the full open market value and you will need your valuer to take that into consideration. The Valuation Office have guidance notes on this subject. However since £300k x 50% is already well within your available £250k RNRB allowance that valuation nuance is not going to save you and IHT so not worth looking into at this time.

PollardUK

Tom99 wrote: »

Since your mother can use your father's RNRB you mother already has a £250k RNRB allowance, of which it seem you will only be able to use max £300k/2=£150k so plenty of headroom, and no point getting any sort of formal valuation now since you will need another one for your mother's probate application as at the date of death.

Also when the time comes the open market value of a 50% share is not always 50% of the full open market value and you will need your valuer to take that into consideration. The Valuation Office have guidance notes on this subject. However since £300k x 50% is already well within your available £250k RNRB allowance that valuation nuance is not going to save you and IHT so not worth looking into at this time.

Hi Tom99,
Thanks again for the info. If Mom carries on this same health trajectory, I'd guess/assume that she will pass away sooner rather than later (i.e in the next few weeks, possibly months, as opposed to years), and, correct me if I'm wrong here, but, (assuming that the house is worth no more than £250,000), then wouldn't it be wholly covered by both Dad and Mom's cumulative RNRB, and pass to us as descendants, (after we'd applied for Letters Of Administration, for the Estate), without us having to pay IHT on it?

Also, I'd assumed that if the date of the RICS Report, or house valuations, were close enough in proximity to the date of the persons death, then they would still be valid/accepted?

Taking the house out of the equation, my initial query was more aligned to being able to get cash out of her Estate, as she is currently (at a reasonable (g)-estimate) still, £45,000 over the IHT limit, so unless we are able to find a loophole/way out, then we'll be paying £18,000 to the Government, (something that neither my Father, nor my Mother, in their ENTIRE LIVES, would have EVER wanted us to do),

Thanks again for all of the info,

kind regards

Tim

Blossom1963

Hello, I'm not sure if this is the right place to ask my question but here goes...
I'm co executor to my aunts will (who sadly passed in October). She divided her estate between 3 (my brother, myself and my late sisters two daughters). The other co-executor to the will was the Trust arm of the Will Writing company (as recommended by my aunts building society) who have since folded.
I am unsure as to what options I have. Can I proceed as the one sole executor or should I contact a solicitor for advice. There will have to be a trust or something formal set up as my sisters girls are only 12 and 9 and believe that they wont get their share until they're 18.
Thank you.

Tom99

PollardUK wrote: »

Hi Tom99,
Thanks again for the info. If Mom carries on this same health trajectory, I'd guess/assume that she will pass away sooner rather than later (i.e in the next few weeks, possibly months, as opposed to years), and, correct me if I'm wrong here, but, (assuming that the house is worth no more than £250,000), then wouldn't it be wholly covered by both Dad and Mom's cumulative RNRB, and pass to us as descendants, (after we'd applied for Letters Of Administration, for the Estate), without us having to pay IHT on it?
Also, I'd assumed that if the date of the RICS Report, or house valuations, were close enough in proximity to the date of the persons death, then they would still be valid/accepted?
Taking the house out of the equation, my initial query was more aligned to being able to get cash out of her Estate, as she is currently (at a reasonable (g)-estimate) still, £45,000 over the IHT limit, so unless we are able to find a loophole/way out, then we'll be paying £18,000 to the Government, (something that neither my Father, nor my Mother, in their ENTIRE LIVES, would have EVER wanted us to do),
Thanks again for all of the info,
kind regards
Tim

[FONT=Verdana, sans-serif]Yes you don't need to worry about the house that will pass to you free of IHT.[/FONT]
[FONT=Verdana, sans-serif]It is your mother's 50% share which will be part of her estate so not £250k/£300k but 50% of that so say £125k-£150k.[/FONT]
[FONT=Verdana, sans-serif]Your mother will has a max £250k RNRB this tax year, so even if the full value of the house was £500k you would still not pay and IHT on it. There is no point in knowing what its exact value is right now.[/FONT]
[FONT=Verdana, sans-serif]It is the rest of her estate which you say is £515k against which you only have £325k + £145k = £470k which leaves £45k taxed at 40%.[/FONT]
[FONT=Verdana, sans-serif]There will be deductions such as funeral costs which are allowable so something a bit less that £45k to pay IHT on.[/FONT]
[FONT=Verdana, sans-serif]I can't see the point in getting a valuation now, yes it will probably be accepted if your mother dies soon, but because it will say 'my opinion is that the 50% share is worth £125k on 17th Dec 2018', it is only inviting the IHT Office or the Valuation Office to probe and maybe query this value. Much better to supply a valuation as at the DOD which is what you are actually saying it is when you make your IHT return.[/FONT]

PollardUK

Hi Tom99,
Again, thank you very much for the info/clarification, its absolutely clear to me now.

kind regards

Tim

Tom99

PollardUK wrote: »

Taking the house out of the equation, my initial query was more aligned to being able to get cash out of her Estate, as she is currently (at a reasonable (g)-estimate) still, £45,000 over the IHT limit, so unless we are able to find a loophole/way out, then we'll be paying £18,000 to the Government, (something that neither my Father, nor my Mother, in their ENTIRE LIVES, would have EVER wanted us to do),

[FONT=Verdana, sans-serif]Your parent joint estate is about £845k and you may be liable to tax on £45k so tax of £18k.[/FONT]
[FONT=Verdana, sans-serif]A relative of mine, a widow, died in 2016 with an estate of £800k and IHT was paid on £475k so £190k tax.[/FONT]

[FONT=Verdana, sans-serif]They were widowed in the 1960's before anything passing to the spouse was tax free, therefore the husband had used up all of his the £5,000 allowance in what he left to his wife. Therefore no inherited £325k could be claimed.[/FONT]

[FONT=Verdana, sans-serif]Also the RNRB had not yet been introduced.[/FONT]

[FONT=Verdana, sans-serif]The galling thing is that, in those days, if your estate was over £5,000 then you paid tax on it all, not just the amount over £5,000. So all those years ago tax was paid on the whole estate meaning no use was actually made of the £5,000 tax free allowance. Nevertheless you are still deemed to have used it all for the purposes of whether it can be transferred.[/FONT]

[FONT=Verdana, sans-serif]Now that really was unfair.[/FONT]

Yorkshireman99

PollardUK wrote: »

Hi Tom99,
Thanks again for the info. If Mom carries on this same health trajectory, I'd guess/assume that she will pass away sooner rather than later (i.e in the next few weeks, possibly months, as opposed to years), and, correct me if I'm wrong here, but, (assuming that the house is worth no more than £250,000), then wouldn't it be wholly covered by both Dad and Mom's cumulative RNRB, and pass to us as descendants, (after we'd applied for Letters Of Administration, for the Estate), without us having to pay IHT on it?

Also, I'd assumed that if the date of the RICS Report, or house valuations, were close enough in proximity to the date of the persons death, then they would still be valid/accepted?

Taking the house out of the equation, my initial query was more aligned to being able to get cash out of her Estate, as she is currently (at a reasonable (g)-estimate) still, £45,000 over the IHT limit, so unless we are able to find a loophole/way out, then we'll be paying £18,000 to the Government, (something that neither my Father, nor my Mother, in their ENTIRE LIVES, would have EVER wanted us to do),

Thanks again for all of the info,

kind regards

Tim

You need to drop the emotion and concentrate on what practical steps can be done. Sadly the case illustrates the missed opportunities for IHT planning. Learn from it for the future for your own estates. A hard lesson but be positive.

PollardUK

Tom99 wrote: »

[FONT=Verdana, sans-serif]Your parent joint estate is about £845k and you may be liable to tax on £45k so tax of £18k.[/FONT]
[FONT=Verdana, sans-serif]A relative of mine, a widow, died in 2016 with an estate of £800k and IHT was paid on £475k so £190k tax.[/FONT]

[FONT=Verdana, sans-serif]They were widowed in the 1960's before anything passing to the spouse was tax free, therefore the husband had used up all of his the £5,000 allowance in what he left to his wife. Therefore no inherited £325k could be claimed.[/FONT]

[FONT=Verdana, sans-serif]Also the RNRB had not yet been introduced.[/FONT]

[FONT=Verdana, sans-serif]The galling thing is that, in those days, if your estate was over £5,000 then you paid tax on it all, not just the amount over £5,000. So all those years ago tax was paid on the whole estate meaning no use was actually made of the £5,000 tax free allowance. Nevertheless you are still deemed to have used it all for the purposes of whether it can be transferred.[/FONT]

[FONT=Verdana, sans-serif]Now that really was unfair.[/FONT]

Jesus, that is just BRUTAL, and makes our issues pale, in comparison,

kind regards

Tim