Will and Probate Question

Htb98

Hello.

I am an executor of a Will of my aunts, who passed away in early August 2020. Due to a number of things (Grief, COVID, Work), I haven’t made as much progress in administrating the final Will as hoped. I’m in dire need of some direction. I’ll start with where I’ve got to so far...

I registered the death within the 5 day timeframe as required. I then used the Tell Us Once service to ensure all government and council bodies are aware. I then let the bank know, and had the account put in trust for now. HMRC have been in touch to say they’ve recalculated everything in terms of benefits and we owe them a small amount, which has now been paid. The situation is fairly complex from this point on... my aunt owned a house with someone who she is not married to. It was a jointly owned home, and therefore transferred upon death. The life insurance policy for this paid out to the other person, who paid of the mortgage.

My aunt leaves a young boy of 8 behind, unfortunately. The Will says he should get the remaining assets at 18/21/23. There isn’t a whole lot to speak of now the house is out of the equation... a small life insurance policy of 30k, a small pension of less than 10k, and around 5k in cash and some other low value items. I’m waiting for the death in service valuation, but I’d imagine in total it will be around 55k. 

So, the house is gone, the bank is aware, HMRC are happy... from this point I am lost and it’s obviously been 7ish months. I haven’t gone through Probate, or gone any further with anything. My questions are as follow:

1. Do I need to go through probate? Can someone guide me through this either way? 
2. The bank are asking where I want the 5k paid... where do I get this paid? Do I have to hold the assets until the boy is 18/21/23? Do I have to hold it in a separate bank account? If probate is required, does this have an impact?
3. Similarly, the pensions, ISA, etc will ask the same...
4. Will there be IHT payable on the above?
5. Finally, and slightly separately, if the new owner of the home were to give some cash, I imagine this would fall separately from the Will and be a separate situation? 

I’m well aware I’m well behind and will probably face some form of penalty, but any sound advice would be helpful. 

Thanks 

Keep_pedalling

First off are you sure the house passed automatically to the joint owner? It seems odd that she would not have made the ownership as tenants in common so that she could leave her share to her son.

You will need to put hers son’s inheritance in trust, but as he cannot receive it for another 10 years then you will need to carefully consider where to invest it, leaving it in an account paying next to no interest will mean it’s value will be greatly devalued by inflation by the time he is 18.

what to do with the money may be better answered on the savings and investments board,

xylophone

Are you your young cousin's guardian? Or are you named as his Trustee?

It would seem that a Trust for a bereaved minor may be necessary.


https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm42815#:~:text=A bereaved minor is a,the minor, IHTA84/S71H.


https://www.ftadviser.com/2016/08/10/ifa-industry/your-business/a-child-who-loses-a-parent-needn-t-lose-to-tax-g0HtvbUULpJMtmWonSHVeP/article.html#:~:text=Trusts for bereaved minors were,his or her minor child.


Is the child the named beneficiary of the insurance policy?


With regard to the pension, is this from a Defined Benefit Pension which will make a regular monthly

payment to the child until he completes his education?


Or is the case that there is a pension of £10.000 that the child will inherit and a death in service payment of some £55,000?

The pension/insurance policy/ death in service are all paid outside the estate?


You say that the house was owned as a joint tenancy rather than as a tenancy in common and therefore  your aunt's partner inherits by simple survivorship?


In terms of IHT your aunt owned a half share in the property - what was the value of her share of the

property?


If your aunt's partner chooses to make a gift to your young cousin, then that has nothing to do with your

aunt's will.


As an outright gift to the child it counts as a gift against the partner's own estate - it can be held in an

account in bare trust for the child - the Trustee may withdraw funds as required that are to be used solely

for the benefit of the child.


Or the partner might choose to contribute a cash sum to the child's JISA.

Marcon

Htb98 said:

Hello.

I am an executor of a Will of my aunts, who passed away in early August 2020. Due to a number of things (Grief, COVID, Work), I haven’t made as much progress in administrating the final Will as hoped. I’m in dire need of some direction. I’ll start with where I’ve got to so far...

I registered the death within the 5 day timeframe as required. I then used the Tell Us Once service to ensure all government and council bodies are aware. I then let the bank know, and had the account put in trust for now. HMRC have been in touch to say they’ve recalculated everything in terms of benefits and we owe them a small amount, which has now been paid. The situation is fairly complex from this point on... my aunt owned a house with someone who she is not married to. It was a jointly owned home, and therefore transferred upon death. The life insurance policy for this paid out to the other person, who paid of the mortgage.

My aunt leaves a young boy of 8 behind, unfortunately. The Will says he should get the remaining assets at 18/21/23. There isn’t a whole lot to speak of now the house is out of the equation... a small life insurance policy of 30k, a small pension of less than 10k, and around 5k in cash and some other low value items. I’m waiting for the death in service valuation, but I’d imagine in total it will be around 55k. 

So, the house is gone, the bank is aware, HMRC are happy... from this point I am lost and it’s obviously been 7ish months. I haven’t gone through Probate, or gone any further with anything. My questions are as follow:

1. Do I need to go through probate? Can someone guide me through this either way? 
2. The bank are asking where I want the 5k paid... where do I get this paid? Do I have to hold the assets until the boy is 18/21/23? Do I have to hold it in a separate bank account? If probate is required, does this have an impact?
3. Similarly, the pensions, ISA, etc will ask the same...
4. Will there be IHT payable on the above?
5. Finally, and slightly separately, if the new owner of the home were to give some cash, I imagine this would fall separately from the Will and be a separate situation? 

I’m well aware I’m well behind and will probably face some form of penalty, but any sound advice would be helpful. 

Thanks 

You say you are 'an' executor, which suggests you may not be the only one? 

What are the guardianship arrangements for the 8 year old? Was the man your aunt lived with the boy's father? If not, and the house was owned as joint tenants (i.e. your aunt's share passes to the man she lives with), it may be that her son has a claim against the estate under the Inheritance Act - rare for such claims to succeed, but this seems a strong possibility. 

Rather than going it alone, getting some professional help might be the best way forward, and would definitely be needed by the little boy's guardian if they wanted to pursue the possibility of a claim against the estate. What seems an insurmountable mountain to someone who isn't used to these things is simply everyday fare for most high street solicitors, so a bit of hand holding is an entirely legitimate approach.

naedanger

Htb98 said:

Hello.

I am an executor of a Will of my aunts, who passed away in early August 2020. Due to a number of things (Grief, COVID, Work), I haven’t made as much progress in administrating the final Will as hoped. I’m in dire need of some direction. I’ll start with where I’ve got to so far...

I registered the death within the 5 day timeframe as required. I then used the Tell Us Once service to ensure all government and council bodies are aware. I then let the bank know, and had the account put in trust for now. HMRC have been in touch to say they’ve recalculated everything in terms of benefits and we owe them a small amount, which has now been paid. The situation is fairly complex from this point on... my aunt owned a house with someone who she is not married to. It was a jointly owned home, and therefore transferred upon death. The life insurance policy for this paid out to the other person, who paid of the mortgage.

My aunt leaves a young boy of 8 behind, unfortunately. The Will says he should get the remaining assets at 18/21/23. There isn’t a whole lot to speak of now the house is out of the equation... a small life insurance policy of 30k, a small pension of less than 10k, and around 5k in cash and some other low value items. I’m waiting for the death in service valuation, but I’d imagine in total it will be around 55k. 

So, the house is gone, the bank is aware, HMRC are happy... from this point I am lost and it’s obviously been 7ish months. I haven’t gone through Probate, or gone any further with anything. My questions are as follow:

1. Do I need to go through probate? Can someone guide me through this either way? 
2. The bank are asking where I want the 5k paid... where do I get this paid? Do I have to hold the assets until the boy is 18/21/23? Do I have to hold it in a separate bank account? If probate is required, does this have an impact?
3. Similarly, the pensions, ISA, etc will ask the same...
4. Will there be IHT payable on the above?
5. Finally, and slightly separately, if the new owner of the home were to give some cash, I imagine this would fall separately from the Will and be a separate situation? 

I’m well aware I’m well behind and will probably face some form of penalty, but any sound advice would be helpful. 

Thanks 

I don't know about the most complicated aspect, namely how you need to proceed given the main beneficiary is a child. But as far as I am aware:

1) Normally you only need to go through probate if any institution holding funds of the deceased requires probate before they will release the estate's assets to the executor, or the estate holds a property in the deceased's sole name. In the case of the estate you are dealing with it sounds like probate may not be required but you would need to check with every firm that holds funds of the estate's (note some money e.g. the pension is probably not part of the estate and so probate will not be required for those). It sounds like the bank don't need probate. (What I don't know is if the fact a beneficiary is a child makes any difference. I doubt it, but there may be an aspect I am unaware of.)

2) At a minimum any funds you hold for the beneficiary should be clearly separated from you own. I expect there are more requirements than that, but I don't know.

3) The pension is not usually part of the estate. So is not strictly a responsibility of the executor. The child's father/guardian should speak to the pension provider.

4) IHT is only payable on estate above at least £325,000 (but the value of the share of the property would be included). So unlikely IHT will be payable.

5) Yes, any cash paid by the new home owner would be a gift and again not the executor's responsibility for overseeing.

Finally I don't think you are well behind and I can't think of any penalties that could apply. It is very common for estates to take more than a year to distribute even in non Covid times for all sorts of reasons. However I agree with the comment that professional help is something to seriously consider.