Report value of estate?

miss_marple

Hello, my mother passed away last month.

She owned a property with my father (husband, who's still alive). The family home is automatically inherited by him of course (the value of the house is approx £390k), and she had £30k in savings left to my sister and me.

Do I still need to report the value of the estate to HMRC even though there wouldn't be any inheritance tax to pay? I know I can do it online, or by using IHT205, But I wondered if it's really necessary given that we don't require probate to deal with any of the affairs.

Also do I need to have the property valued even though my father will continue living in it as normal?

Thanks!

Brynsam

miss_marple said:

Hello, my mother passed away last month.

She owned a property with my father (husband, who's still alive). The family home is automatically inherited by him of course (the value of the house is approx £390k), and she had £30k in savings left to my sister and me.

Do I still need to report the value of the estate to HMRC even though there wouldn't be any inheritance tax to pay? I know I can do it online, or by using IHT205, But I wondered if it's really necessary given that we don't require probate to deal with any of the affairs.

Also do I need to have the property valued even though my father will continue living in it as normal?

Thanks!

You say your father inherits the family home 'of course'. Are you quite certain your parents held this as joint tenants, rather than tenants in common?

Are the savings held with institutions who are happy to release funds of £30K without probate?

miss_marple

Brynsam said:

You say your father inherits the family home 'of course'. Are you quite certain your parents held this as joint tenants, rather than tenants in common?

Are the savings held with institutions who are happy to release funds of £30K without probate?

Hello, thanks for your reply.

Good point... they purchased the house together as a married couple in 1986 and are both on the deeds. Section B of the deeds lists both their names without any restrictions, so I'd assumed its a joint tenancy, I hope that's the case. She also said the property should pass to him in her will.

Yes the financial institutions don't require probate.

So do you think I would have to report the value to HMRC and do I need to get the house valued even though it passes to my father automatically?

Savvy_Sue

It may be worth getting the house valued now, if you can, simply to establish a baseline for valuation for later. You won't be able to sell the house without probate, whether that's after your dad's death, or if he wants to move. And you may well have to do probate for Mum before you do it for Dad - you'll do it at the same time, but you'll need both. So doing it now may be the simplest thing to do. 

Hope I am making sense ... 

miss_marple

Savvy_Sue said:

You won't be able to sell the house without probate, whether that's after your dad's death, or if he wants to move. And you may well have to do probate for Mum before you do it for Dad - you'll do it at the same time, but you'll need both.  

Thank you for your reply.

Can you explain why I will need probate for my mum, if the house passes automatically to my dad as I thought there wouldn't be a need to do it for her?

I have already completed the Land Registry's Deceased Joint Proprietor (DJP) form and sent it off, so only my dad should be on the deeds when he dies unless they need to see probate as part of the DJP process (they only asked to see a death certificate when applying).

Thanks for your help.

relaxtwotribes

Your Mum's estate will be above the nil rate band for IHT of  £325k, so when you will need to transfer some of Dad's unused NRB and in order to do that you will have to produce the probate certificate for his estate.

miss_marple

relaxtwotribes said:

Your Mum's estate will be above the nil rate band for IHT of  £325k, so when you will need to transfer some of Dad's unused NRB and in order to do that you will have to produce the probate certificate for his estate.

I thought her estate would be worth £390k divided by 2 as she owned half the property, so £185k + £30k = £215k? Or do you include the full value of the house even though she only owned half?

When my dad passes I thought that would mean we would need probate for him as that will be above £325k of course. We could then use his NRB / RNRB which would give us up to £500k before paying IHT (He will be well below that so we shouldn't really need to involve my mums NRB / RNRB).

Or have I misunderstood how it works?

xylophone

You won't be able to sell the house without probate, whether that's after your dad's death, or if he wants to move. 

If as stated, the house was owned as joint tenants, then the property automatically becomes the sole property of the survivor - it does not pass by will therefore probate would not be required to sell it.

The survivor can advise the LR on Form DJP.

Even had it been owned as T-I-C, and there had been a Form A restriction in place, it would have been possible to sell without probate  - see  https://forums.moneysavingexpert.com/discussion/comment/77044408/#Comment_77044408

in order to do that you will have to produce the probate certificate for his estate.

Regarding the transferable nil rate band https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/497793/IHT402.pdf

the form seems to allow for no grant having been taken out.

That said, for the future, the OP would keep a copy of the will and evidence of the proportion of the NRB used on her mother's death. 

https://www.gov.uk/guidance/inheritance-tax-transfer-of-threshold

https://www.gov.uk/guidance/inheritance-tax-residence-nil-rate-band

I don't see any need for the property to be valued now - the value at the date of death of father would seem to me to be the relevant figure?

Mojisola

When Mum died, the house was owned as joint tenants and most of their accounts were joint apart from some insurances - we didn't need probate or do anything official. The death certificate and her will was enough to deal everything. 
When Dad died, we got probate for his estate because the house had to be sold. 

miss_marple

xylophone said:

That said, for the future, the OP would keep a copy of the will and evidence of the proportion of the NRB used on her mother's death. 

I don't see any need for the property to be valued now - the value at the date of death of father would seem to me to be the relevant figure?

Thank you, that makes sense.

Mojisola said:

When Mum died, the house was owned as joint tenants and most of their accounts were joint apart from some insurances - we didn't need probate or do anything official. The death certificate and her will was enough to deal everything. 
When Dad died, we got probate for his estate because the house had to be sold. 

Thank you, this is what I was planning to do for us. Glad others have done the same.

relaxtwotribes

Ooops, yes.  I got it the wrong way around.  Yes, you will only need to transfer some NRB from Mum if your Dad's estate exceeds £500k.