Applying for probate

beavere38

I have a complicated situation to sort out so sorry if this is long winded, I have never sorted out an estate before. Both my mother and sister passed away recently, my sister passed away first. I need to get on and start to sort their estates out.
Mum had a will where I was one of 2 executors. My ex wife was the other and is sending me a PA15 to renounce her role leaving me as sole executor. Mum left cash gifts to my children and the remainder divided between myself and my sister so I now inherit the remainder myself. .
My sister appears to have died intestate so I have initiated a will search with Certainty and have to wait 2 months (usually 1 month but 2 at the moment due to Covid-19). If there is no will then mum inherits her estate. I have a solicitor who is going to help me apply for the grant of administration to deal with my sister's estate as I wanted to be 100% sure it was done by the book in case a will turns up later. I want to do everything else myself.
I've looked on the GOV UK website and I need to report the total value of mum's estate to apply for probate. I've estimated mum's estate at £91,607 and my sister's at £201,318 so whether a will turns up or not the total value will be under the £325k IHT threshold.
My first question is am I ok to go ahead and apply for probate for mum's estate given that her total assets are (and will be) unknown until I have finished sorting my sister's estate out?
My second question: do you have to report some sort of final value of someone's estate?
Lastly will I be able to take out some executor insurance that would protect me in perpetuity so that if a will turned up at a later date I wouldn't face losing the value of my sister's estate that I inherit via my mum's estate?
Thank you in advance as always, I really appreciate the advice I am getting on here.

Owain_Moneysaver

You will have a value for sister's estate as at date of death for the probate application. You can assume without a Will that mum inherits it all, and include that value in mother's estate, including a note that it is an assumption and an estimated value of a pending bequest. It won't affect the IHT but as it's so close to the threshold you should take care the forms are completed accurately and you have supporting evidence for figures wherever possible. 
The final value of the estate is presented in the estate accounts, which are given to any residuary legatee, and must be kept for 20 years in case HMRC or anyone else want to see them. 
You can get executor's insurance, which can cover 

• Appearance of a missing beneficiary not known at the time of distribution
• Discovery of a will after an intestacy distribution

https://www.wesleyan.co.uk/commercial/insurance/executor-and-inheritance-insurance-probate
Note that some policies run for perpetuity and some run only for 18 months following the date of death. You'll probably need an insurance broker to advise you on the most suitable policy as they do vary considerably. 
You don't mention it, but if your mother has previously inherited from her husband there may be an additional nil-rate band of another £325k that can be applied to her estate as well. 

beavere38

Thank you Owain_Moneysaver. You said "You don't mention it, but if your mother has previously inherited from her husband there may be an additional nil-rate band of another £325k that can be applied to her estate as well."
Please could you clarify what that means? My dad died 17 years ago, he was married to mum for 40 years and left everything to her in his will. Their only real asset at the time was the family home which was sold for £135k then mum bought a retirement flat.

beavere38

This is all very complicated when you have never done it before. I found this on the Saga website:
"Widowed 

Definition: Someone whose spouse or civil partner is already dead.

The tax-free amount depends on what the first to die left on their death. If everything was left to their spouse, no tax will normally be due on the first £650,000 when the widow dies."
Mum was widowed. When dad died he left her everything in his will and she was his spouse.  If I am reading / understanding the above correctly then the IHT threshold for her estate will be £650k is that correct? Thanks again.

Bobziz

That sounds right to me. You'll also have the residence nil rate band too. Neither estate will be anywhere near needing to pay IHT.

BooJewels

Sorry for your additional loss @beavere38 - I've dropped in some of your recent threads, you have my condolences and I can only imagine how painful and complicated the situation has become.

Your interpretation of the IHT situation would be the same as mine.  My father passed recently and I've just done his probate/IHT stuff and as my Mum died fairly recently too and left everything to him (and we have her will too), he inherits her allowance, so his is twice, at £650k.  My father's estate, if we were lucky enough to get a good price for his house, might potentially nudge the single IHT limit, but with Mum's doubling of it, it won't even be close.  There's this comment on the IHT form, which I found useful - as it gives us over 380k of additional buffer in case we find something we don't already know about, or the house sells especially well - box K being the net qualifying value of the estate and IHT217 is the very simple form where you ask them to take the earlier spouse's estate into account too:
(sorry, I can't make this quote from the form work, formatting-wise)

"If you find something has been left out, or if any of the figures you have given in this form change later on,

you only need to tell HM Revenue and Customs (HMRC) if, taking all the omissions and changes into account,

the value at box K is more than the Inheritance Tax nil rate band (or twice the nil rate band where form IHT217

has been submitted)."

beavere38

Thanks again for your replies. I also found a pdf guide to IHT on the Saga website which I found very informative. This is the link if anyone wants to read it: https://www.saga.co.uk/contentlibrary/saga/publishing/verticals/money/personal-finance/inheritance/saga-guide_inheritance-tax.pdf?la=en

Owain_Moneysaver

Sister to Mother and You: allowance of £325k (plus any allowance for the main residence nil rate band, but I don't know if this will apply).
Mother to you: allowance of £325k + £325k transferred from husband, plus allowance for the main residence nil rate band.
Use IHT205 and IHT217 and claim the transfer of the husband's nil rate band even if you don't need it, because that will put you well clear of the IHT limit and hopefully will avoid time-consuming close scrutiny of your figures.

getmore4less

Even if the total was into IHT you could divert the sisters estate direct to you with a deed of family arrangement(Deed of Variation, DOV) to keep your mums estate smaller.

Any reasons to think sis made a will?
Any sign of any solicitors bill on any of her accounts?