Questions re. ISAs following bereavement

eskbanker

crikaus said:

Looks like a call to Barclays on Monday!

I'd caution against any expectation that Barclays should be perceived as experts on subjects like this (not that I'm claiming expertise myself either) - there have been so many posts on here regarding ill-informed customer-facing bank staff, and Barclays in particular seem to crop up more than most, so IMHO it's always best to familiarise with the official rules as published on gov.uk, rather than relying on bank employees to know the definitive answers!

Robert_McGeddon

eskbanker said:

Robert_McGeddon said:
I'm seeing conflicting information:

1 At https://www.hl.co.uk/investment-services/isa/additional-permitted-subscription-aps the suggestion is that the ability to use an APS ceases once the funds are withdrawn from the deceased partner's account.

I'm not seeing this suggested in that document, could you highlight specifically where it says or implies that?

Quite near the top:

"If the deceased died on or after 6 April 2018, their ISA will become a 'continuing ISA'. It will keep this status until the earliest of:

• The completion of the administration of the estate
• The 3rd anniversary of the date of death
• The closure of the ISA due to all the funds being withdrawn"

But just because it's there in black and white doesn't mean it's correct!

Robert_McGeddon

eskbanker said:

crikaus said:

Looks like a call to Barclays on Monday!

I'd caution against any expectation that Barclays should be perceived as experts on subjects like this (not that I'm claiming expertise myself either) - there have been so many posts on here regarding ill-informed customer-facing bank staff, and Barclays in particular seem to crop up more than most, so IMHO it's always best to familiarise with the official rules as published on gov.uk, rather than relying on bank employees to know the definitive answers!

Yes, go for it - with your eyes open - you have nothing to lose. If you quote from the 2nd link in my earlier post you should get off on the right foot.

Swipe

https://www.gov.uk/individual-savings-accounts/inheriting-an-isa-from-your-spouse-civil-partner

eskbanker

Robert_McGeddon said:

eskbanker said:

Robert_McGeddon said:
I'm seeing conflicting information:

1 At https://www.hl.co.uk/investment-services/isa/additional-permitted-subscription-aps the suggestion is that the ability to use an APS ceases once the funds are withdrawn from the deceased partner's account.

I'm not seeing this suggested in that document, could you highlight specifically where it says or implies that?

Quite near the top:

"If the deceased died on or after 6 April 2018, their ISA will become a 'continuing ISA'. It will keep this status until the earliest of:

• The completion of the administration of the estate
• The 3rd anniversary of the date of death
• The closure of the ISA due to all the funds being withdrawn"

But just because it's there in black and white doesn't mean it's correct!

That doesn't mean what you perhaps believed it to - it's just saying that on closure, the deceased's ISA ceases to be a 'continuing ISA', which is significant only in terms of valuing it, and therefore the value of the resultant APS is frozen by the closure balance, but doesn't otherwise affect the ability to claim an APS from that ISA.

masonic

As eskbanker suggests, the relevance of a 'continuing ISA' is that the valuation point of the ISA for the APS can be delayed (presuming the death occurred after 5th April 2018). In a situation like the OP's, where the value has fallen since the holder's death, it is possible to use the valuation at their date of death instead (and this is the only option for deaths occurring on or before 5th April 2018).

Robert_McGeddon

eskbanker said:

That doesn't mean what you perhaps believed it to - it's just saying that on closure, the deceased's ISA ceases to be a 'continuing ISA', which is significant only in terms of valuing it, and therefore the value of the resultant APS is frozen by the closure balance, but doesn't otherwise affect the ability to claim an APS from that ISA.

Agreed. Thanks for putting ne straight!

Good news for the OP. Also, consistent with Barclays own blurb here, so should be relatively straightforward to obtain.

itm2

On a related matter, can a fluctuation in the value of S&S ISAs (or any other market investments) cause issues with IHT? If the value of an investment falls dramatically between declaring the assets of the deceased and closing the associated accounts then it could bring the total value of the estate below the IHT in borderline cases. So you could in theory pay IHT and then discover that it wasn't payable after all?

masonic

itm2 said:

On a related matter, can a fluctuation in the value of S&S ISAs (or any other market investments) cause issues with IHT? If the value of an investment falls dramatically between declaring the assets of the deceased and closing the associated accounts then it could bring the total value of the estate below the IHT in borderline cases. So you could in theory pay IHT and then discover that it wasn't payable after all?

If the assets are not sold during administration of the estate, then it would be the value on the relevant date that determined whether IHT was payable. I suppose in the extreme case that someone owned a very large stake in a single company that went bust and little else, the estate could end up insolvent.

I suppose this is an element of tax planning that many overlook - timing one's death to coincide with a stockmarket crash is certainly tax efficient if one holds a lot of investments, though perhaps should not be a priority.

itm2

So if IHT was paid based on the valuation of the estate at the date of death, but the estate was worth 20% less by the time Probate was granted, is the "overpaid" IHT reclaimable?