Probate

Laineyrose

My mother died recently and my brother and myself are executors of the will. The estate is to be divided equally between me and my brother. My mum transferred her bungalow by deed of gift to myself and my brother in 1997, so we owned the property but mum to remain in the property until her death. I just want to know whether I need to apply for probate when in effect the bungalow is not part of her estate as land registry have me and my brother as proprietors.

Mojisola

It depends on how much her estate is and whether all the organisations involved will release money without probate - have you asked any of them yet?

pip895

I think if the bungalow would put her into IHT territory then you would need probate as it would count as "a gift with reservation" - unless she paid you a market level rent.

Mojisola

Laineyrose wrote: »

My mum transferred her bungalow by deed of gift to myself and my brother in 1997, so we owned the property but mum to remain in the property until her death.

You will probably have a CGT bill to pay when the bungalow is sold if you two weren't living there as well.

xylophone

My mum transferred her bungalow by deed of gift to myself and my brother in 1997, so we owned the property but mum to remain in the property until her death.

The bungalow cannot be covered by her will as she gave the house away before she died so that it was no longer hers to bequeath.

But did she pay a market rent? If not,this was a gift with reservation of benefit and ineffective from the point of view of IHT.

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14334




However, the house does legally and beneficially belong to you and your brother - if you sell it, as it was not your PPR, you will need to consider your CGT liability.

You will wish to access your mother's savings/investments/assets.

The financial institutions involved may insist that you have a grant before they will permit this. You would need to check.

Laineyrose

I am living in the bungalow now as I moved back to Leeds three years ago when mum became ill and had to move into a care home. My house is in Plymouth but plan to sell this and live in the bungalow but will have to pay my brother his half share of the bungalow. Mum only had a small amount in the bank, so apart from that I guess the only other consideration is the contents of the bungalow would be classed as part of her estate but not the bungalow, hence my query on whether I would still need to apply for probate. It certainly is very confusing!

Keep_pedalling

If the bungalow is worth more than £325K you could have a double tax whammy. If she was a divorc!e rather than a widow, then anything over that sum (including the bungalow) will be subject to IHT, and any increase in value of the bungalow since you took ownership will be subject to CGT when it is sold.

If she had not transferred the house you would not have to worry about CGT and the estate would have been able to make use of the residential nil rate band, meaning £475k would be tax free, up to double that if she was a widow.

Mojisola

Laineyrose wrote: »

I am living in the bungalow now as I moved back to Leeds three years ago when mum became ill and had to move into a care home. My house is in Plymouth but plan to sell this and live in the bungalow but will have to pay my brother his half share of the bungalow. Mum only had a small amount in the bank, so apart from that I guess the only other consideration is the contents of the bungalow would be classed as part of her estate but not the bungalow, hence my query on whether I would still need to apply for probate. It certainly is very confusing!

Go to the organisations with her death certificate, the will and evidence of your identity and see if they will release the money. You will be asked to sign an indemnity form to protect them.

Unless your mother had antiques or expensive jewellery, the value of the contents of the house will be minimal.

Laineyrose

Thanks all for advice, but I’m still not sure if the bungalow (worth approx. £190,000) would be classed as part of mums estate as she no longer owned it, as she gifted it to me and my brother in 1997.

badger09

Laineyrose wrote: »

Thanks all for advice, but I’m still not sure if the bungalow (worth approx. £190,000) would be classed as part of mums estate as she no longer owned it, as she gifted it to me and my brother in 1997.

You have given no clue as to the total size of mum's estate. That is a significant factor, as, for the purposes of IHT, the gift of the bungalow to you & your brother would effectively be ignored unless mum paid market rent for it.

Some institutions insist on Grant of Probate even for relatively small amounts. Have you asked the banks/building societies etc where she had her savings?

xylophone

I am living in the bungalow now as I moved back to Leeds three years ago when mum became ill and had to move into a care home. My house is in Plymouth but plan to sell this and live in the bungalow but will have to pay my brother his half share of the bungalow. Mum only had a small amount in the bank, so apart from that I guess the only other consideration is the contents of the bungalow would be classed as part of her estate but not the bungalow, hence my query on whether I would still need to apply for probate. It certainly is very confusing!

As soon as your mother gave the property to you and your brother, it became yours legally and beneficially - this seems to have been in 1997.

She could not then bequeath the property in her will because she no longer owned it.

However, as has been explained above, unless she paid a market rent for the property after making the gift for the time that she occupied it (16 years?) its value would still be taken into account when assessing any IHT liability.

That said, it would appear from what you have said that the value of your mother's estate (just a little cash in the bank and household goods?) plus the value of the property falls below the amount at which IHT would become due.

You mention that you moved into the bungalow (which was your right as it belonged to you and your brother) three years ago, leaving your own home in Plymouth.

You now have to consider any CGT implications on the sale of your Plymouth property as it has not been your PPR for three years.


You intend to buy out your brother's share of the property.

He needs to consider his CGT position - as there will virtually certainly be an uplift in value between 1997 and the date you buy out his interest.