Simple Will, IHT and Probate

mavisangelica

I am currently working through my late husband’s affairs to eventually execute his will. I am in the early stages and am busy collating everything together I think that I know what I am doing but have a few basic questions and need my basic understanding confirmed (or not)

 I have read through form IHT205 which has helped a lot. From this I realised that I complete this and the information that it provides then feeds on to the PA1P probate form.

 

I still need to submit IHT205 even if I don’t need to pay inheritance tax?

 

The house (the Land Registry document does not state that we are Tenants in Common) and the joint bank and savings and investment accounts are entered onto the IH 205 but are discounted for probate purposes.

 

The will is pretty straight forward – I am the executor and only myself and our son benefit from the will. Son inherits shares, premium bonds and sole bank/savings/investments.

 

Questions:

Do I necessarily need to go to probate if the financial organisations do not require it to release funds?

 

If I don’t then there is an added potential complication – there is a specific clause in his will that states that his son from a previous marriage has no claim on his estate (this will was drawn up by a solicitor). Would probate protect against any potential problems that could arise.

 

Where would the funeral fees come from?  There is a complicated clause which I think is a longwinded description of ‘Residuary Estate’ and point (1) of it says ‘Upon trust to pay thereout my debts and funeral and testamentary expenses. So does this mean that anything else that he owns such as his car should be sold to pay any debts such as funeral, credit card debts, etc. (Point (2) says upon trust for my wife ….)

 

And my last question with reference to the one above – is it ok for me to pay the funeral costs, say, on my credit card and pay off his credit card from our joint account on the basis that I get the residual estate?

 

Sorry this is so longwinded.

poppystar

Yes to needing to submit IHT205 even if no tax to pay
Yes almost certainly to probate if there are premium bonds involved as NS&I seem to require it. 
You can pay for funeral expenses out of the estate.

Others with more knowledge will be along for the other qs I’m sure. How old is son - adult? 

mavisangelica

Thanks poppystar. Yes son is an adult (still living at home though)
I know that the funeral expenses come out of the estate and should be settled before anything is distributed but just wondering if it should come from the bank and savings accounts in sole name (which will eventually go to son). Or if, because the sole bank accounts are particularly mentioned in the will (ie it states that any bank account in sole name should go to son) then the debts should come out of the residual estate and I can pay them in lieu of the residual estate as there is no cash in the residual estate but there is a car.

xylophone

The funeral bill can be presented to your husband's bank and paid before probate is granted.
Did your husband leave his interest in the property to you?

Son inherits shares, premium bonds and sole bank/savings/investments.

It is likely that you will require probate to deal with the shares and premium bonds.

You should keep a note of how much of your husband's nil rate band has been used in the bequest to your son.

Mojisola

mavisangelica said:

Yes son is an adult (still living at home though)
I know that the funeral expenses come out of the estate and should be settled before anything is distributed but just wondering if it should come from the bank and savings accounts in sole name (which will eventually go to son). 

Could the disinherited son be said to be financially supported by his father or does he fully pay his way?  If financially supported, he could make a claim on the will. 
The money in the sole accounts shouldn't be used for estate expenses - the son should inherit whatever the value was at the date of death. 

NinjaTune

Re: Premium bonds - it depends on the amount and whether there are any other investment with NS&I.  As long as all investments with NS&I, including the bonds, are less than £5,000 then you don't need a Grant of Probate.


https://www.co-oplegalservices.co.uk/media-centre/articles-apr-jun-2019/is-probate-needed-for-premium-bonds/

mavisangelica

xylophone said:

The funeral bill can be presented to your husband's bank and paid before probate is granted.
Did your husband leave his interest in the property to you?

Son inherits shares, premium bonds and sole bank/savings/investments.

It is likely that you will require probate to deal with the shares and premium bonds.

You should keep a note of how much of your husband's nil rate band has been used in the bequest to your son.

There isn't anything specific about the house but as we are joint it would automatically pass to me anyway? But I think that it is covered in the paragraph about Residuary Estate as it talks about 'real and personal property' which comes to me after debts are taken.
What do you mean by keeping a note of the nil rate band? I have got a spreadsheet set up to keep track of everything.

mavisangelica

Mojisola said:

mavisangelica said:

Yes son is an adult (still living at home though)
I know that the funeral expenses come out of the estate and should be settled before anything is distributed but just wondering if it should come from the bank and savings accounts in sole name (which will eventually go to son). 

Could the disinherited son be said to be financially supported by his father or does he fully pay his way?  If financially supported, he could make a claim on the will. 
The money in the sole accounts shouldn't be used for estate expenses - the son should inherit whatever the value was at the date of death. 

As a child he paid Child Support for disinherited son but he is now in his thirties and there has been no contact for many years after son wanted nothing to do with father. (Son was in his twenties when this decision was made - not as a child).
Thanks that is what I suspected about the sole accounts.

mavisangelica

NinjaTune said:

Re: Premium bonds - it depends on the amount and whether there are any other investment with NS&I.  As long as all investments with NS&I, including the bonds, are less than £5,000 then you don't need a Grant of Probate.


https://www.co-oplegalservices.co.uk/media-centre/articles-apr-jun-2019/is-probate-needed-for-premium-bonds/

Thanks you for that link it was very useful - I didn't know that you couldn't transfer premium bonds - only cash them in.
And yes the value of all NS&I products will be over £5,000 so I will have to apply for probate.

xylophone

as we are joint 

You mentioned Tenants-in-Common in your post above.

If the property was held as joint tenants, then the property falls into your sole ownership as survivor. 

https://www.gov.uk/government/publications/deceased-joint-proprietor-djp

I didn't know that you couldn't transfer premium bonds - only cash them in.

https://www.nsandi.com/what-do-i-do-if-nsi-customer-has-died

The Bonds can remain in the Draw for up to twelve months after the owner has died - see above.

xylophone

What do you mean by keeping a note of the nil rate band? 

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

This is information for your own executor ( a long time in the future one hopes)....