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House gifted but death within seven years

edited 30 November -1 at 1:00AM in Deaths, Funerals & Probate
29 replies 2.6K views
johnbfanjohnbfan Forumite
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edited 30 November -1 at 1:00AM in Deaths, Funerals & Probate
Hi
My Dad died in October. My brother and I are the beneficieries and Executors of his will, mainly made up of his house. This house is my brother's home so won't be sold. He always lived with my parents.

Dad gifted the house to us four years ago (he was known as a "Settlor") and its complicated the Probate because of it being inside the seven year limit. I phoned the Probate Court today and they said we should get someone to do it on our behalf. So this is what we have decided to do.

What sort of fees are we looking at paying? Dad had a funeral plan but nothing to pay anything else with. The house is worth around £250,000, the rest of his belongings probably around £3,000.
I'm stressed enough over this - please don't add to it.:eek: :cry:
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Replies

  • LintonLinton Forumite
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    johnbfan wrote: »
    Hi
    My Dad died in October. My brother and I are the beneficieries and Executors of his will, mainly made up of his house. This house is my brother's home so won't be sold. He always lived with my parents.

    Dad gifted the house to us four years ago (he was known as a "Settlor") and its complicated the Probate because of it being inside the seven year limit. I phoned the Probate Court today and they said we should get someone to do it on our behalf. So this is what we have decided to do.

    What sort of fees are we looking at paying? Dad had a funeral plan but nothing to pay anything else with. The house is worth around £250,000, the rest of his belongings probably around £3,000.


    Are you confusing 2 separate issues?...
    1) 7 year rule for Inheritance Tax:
    If someone dies within 7 years of making a gift the value of the gift is added to the value of the estate when calculating inheritance tax. In this case the total is less than the IHT allowance so there is no tax to pay anyway.
    2) Distribution of estate:
    Your father gifted the house so it is not part of the estate as he did not own the house at time of death. You and your brother were already owners of the house. There is no need for probate since there are no relevent assets that require it.
  • xylophonexylophone Forumite
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    (he was known as a "Settlor")

    Did he gift the property into Trust?
  • SeniorSamSeniorSam Forumite
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    This should not have complicated Probate at all. The home was gifted to you several years ago and as ;long as this was done correctly and change of ownership registered in the Land Registry, there IS no problem.
    You have already been told about the 7 year rule, which does not apply as you value of the estate, even with the property value, was not over the nil rate band allowance.
    There should be no reason why the Probate Court could not deal with you (or the executor) direct as there are no rules to say that queries have to be dealt with by a solicitor or other legal person. I suggest you persue it direct with the Probate office and ask for an explanation.
    I'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, so my comments are just meant to be helpful.
  • nom_de_plumenom_de_plume Forumite
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    johnbfan wrote: »
    Hi
    My Dad died in October. My brother and I are the beneficieries and Executors of his will, mainly made up of his house. This house is my brother's home so won't be sold. He always lived with my parents.

    Dad gifted the house to us four years ago (he was known as a "Settlor") and its complicated the Probate because of it being inside the seven year limit. I phoned the Probate Court today and they said we should get someone to do it on our behalf. So this is what we have decided to do.

    What sort of fees are we looking at paying? Dad had a funeral plan but nothing to pay anything else with....... the rest of his belongings probably around £3,000.


    Are there any debts owed by your father that could / would amount to more than this sum?
  • PasturesNewPasturesNew Forumite
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    If the total value of the estate is under the Inheritance Tax threshold - and it sounds as if it's well under - then you need not worry about it at all as it's irrelevant.

    In short, any "rules" you're thinking of would be for the purposes of:
    1/ Trying to avoid/reduce paying Inheritance Tax. In your case there's no tax to pay as the whole estate is under the threshold.
    2/ Trying to avoid paying care home fees. In your case there are no fees as there was never a care home involved.
    3/ Trying to avoid something. In your case it doesn't sound as if you're trying to avoid paying for something, e.g. debts or obligations.
  • johnbfanjohnbfan Forumite
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    Does anyone know what forms we will have to fill out? We are still waiting for a Probate Pack to come but it looks so complicated and we just don't understand the phrasing.
    I'm stressed enough over this - please don't add to it.:eek: :cry:
  • xylophonexylophone Forumite
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    Did your father gift the house into Trust? I ask because you have said that some piece of documentation refers to him as a Settlor.

    If so, who are the Trustees of the Trust?

    https://www.gov.uk/trusts-taxes
  • johnbfanjohnbfan Forumite
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    My brother and I are Beneficiaries. Im not sure but think we are Trustees. What is scaring me is it seems Dad as Settlor. I am totally confused by it all. Especially as in one place I read he had gifted us the house and any gift over £150,000 is subject to Inheritance Tax.

    I am hoping that if the house is worth £245,000 and there are two of us then that figure is divided between the two of us, and we will not be liable for Inheritance tax

    This is affecting my health now. And I really cant cope with it. My anxiety is through the roof.
    I'm stressed enough over this - please don't add to it.:eek: :cry:
  • johnbfanjohnbfan Forumite
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    xylophone wrote: »
    Did your father gift the house into Trust? I ask because you have said that some piece of documentation refers to him as a Settlor.

    If so, who are the Trustees of the Trust?

    https://www.gov.uk/trusts-taxes




    My brother and I are Beneficiaries. Im not sure but think we are Trustees. What is scaring me is it seems Dad as Settlor. I am totally confused by it all. Especially as in one place I read he had gifted us the house and any gift over £150,000 is subject to Inheritance Tax.

    I am hoping that if the house is worth £245,000 and there are two of us then that figure is divided between the two of us, and we will not be liable for Inheritance tax

    This is affecting my health now. And I really cant cope with it. My anxiety is through the roof.
    I'm stres
    I'm stressed enough over this - please don't add to it.:eek: :cry:
  • xylophonexylophone Forumite
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    If your father gifted the house into Trust before he died, then at the point, the legal owners of the property became the Trustees who were holding it on trust for the beneficiaries.

    Your father could not then leave the house in his will because he had already given it away.

    The gift into trust would however have needed to be taken into account for IHT purposes - that said, it would appear that your father's assets are below the IHT threshold.

    Did a solicitor deal with the transfer into Trust? If so, you might refer to his firm for further advice.

    If not, you might consult a local STEP solicitor - check on his fees.

    https://www.step.org/step-directory
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