Is jointly-owned property included in the value of an estate when someone dies intestate?

ConfusedCF

I'm looking for some clarification on the following: my father recently died, and did not leave a will. Him and my Mother (married) own their house as joint tenants, which is worth around 850k. He has approximately 80k in savings and around 150k in other assets eg cars, shares etc. I understand that according to the rules of intestacy, my Mother will inherit the house and the first 270k of his estate, with anything above that threshold being split between her and her children.

My question is: the current Inheritance Tax rules state that Inheritance Tax will be payable on anything over a threshold of 325k. What seems to be a grey area is whether or not his half of the house (425k) is included in the value of the estate, or if it will only apply to the 230k of savings/cars etc, and she will then be below the threshold.

We will be dealing with the estate through a probate solicitor, but it would be extremely helpful to have clarity on this issue beforehand.
Many thanks.

Jeremy535897

If the house was owned as joint tenants rather than as tenants in common, the house passes to Mother by survivorship, and is not part of the intestate estate. Under intestacy, Mother receives all Father's personal possessions, whatever their value, and the first £270,000 of all other assets. From your figures above, the entire estate will pass to Mother, and will therefore be exempt from inheritance tax.

An inheritance tax bill could be avoided, if there were to be one, by varying the intestacy. This might have some merit anyway, and can be discussed with the solicitor.

xylophone

 I understand that according to the rules of intestacy, my Mother will inherit the house and the first 270k of his estate, with anything above that threshold being split between her and her children.

The rules of intestacy are not relevant to assets owned as joint tenants (rather than tenants in common) - the joint owner inherits simply by survivorship.

This does not apply to solely owned assets.

Assuming a death in England/Wales, where a person dies intestate and was married with children,

https://www.gov.uk/inherits-someone-dies-without-will/y/england-and-wales/yes/yes/yes

The husband, wife or civil partner keeps all the assets (including property), up to £270,000, and all the personal possessions, whatever their value.

The remainder of the estate will be shared as follows:

• the husband, wife or civil partner gets an absolute interest in half of the remainder
• the other half is then divided equally between the surviving children

If a son or daughter (or other child where the deceased had a parental role) has already died, their children will inherit in their place.

From what you have said, it would seem that your mother will inherit all your father's assets.

https://www.clarkewillmott.com/blog/intestacy-and-unexpected-inheritance-tax-bills/#:~:text=Intestacy%20and%20unexpected%20Inheritance%20tax%20bills&text=Assets%20left%20to%20a%20surviving,pass%20to%20the%20surviving%20spouse.

xylophone

The value of the deceased's interest in the property will still need to be reported for probate.
https://www.gov.uk/government/publications/inheritance-tax-jointly-owned-assets-iht404

getmore4less

This comes up a lot

There is a taxable estate and a distributable estste

All assets including share  joint are included in the inventory of the estate for IHT purposes.

Then exemptions are applied to assess the tax on the total.

In this case there will be spouse exemption for the house* the first £270k of the distributable estate and 1/2 the remainder the rest can then start using up any nil rate band available.

Don't forget the PETS.


* Joint assets do not form part of the distributable estate