Deceased P/Exchanged car for one in my name before death - how to add to IHT400

Ali71

Good morning,

I am about 80K give or take short of the maximum £500,000 including everything. I am the only beneficiary, and the house was already half in my name being made over to me as a beneficiary at the time of my mum's passing. Unfortunately that means I am liable for the full council tax for the year for that house (as well as mine) but it is what it is. And I've just realised I am going to have to reprint off a wadge of the iht 400 as I've forgotten to add the little refund of council tax he had for the year. Blast! Been told on another thread that it makes sense on the IHT404 (jointly owned assets) to put down 50% as my contribution to the property being that it passed to me and I am therefore the other owner so I'll go with that. This is giving me sleepless nights...........

Many thanks all for your help and patience!   

getmore4less

What there any right for your father to live there or was that absolute from your mother?

That would create a trust. which could be beneficial


There should be transferable nil rate bands to give more than £500k

Keep_pedalling

Ali71 said:

Good morning,

I am about 80K give or take short of the maximum £500,000 including everything. I am the only beneficiary, and the house was already half in my name being made over to me as a beneficiary at the time of my mum's passing. Unfortunately that means I am liable for the full council tax for the year for that house (as well as mine) but it is what it is. And I've just realised I am going to have to reprint off a wadge of the iht 400 as I've forgotten to add the little refund of council tax he had for the year. Blast! Been told on another thread that it makes sense on the IHT404 (jointly owned assets) to put down 50% as my contribution to the property being that it passed to me and I am therefore the other owner so I'll go with that. This is giving me sleepless nights...........

Many thanks all for your help and patience!   

We’re you mum and dad not married? If they were you have a lot more to play with via the transferable NRBs.

Ali71

getmore4less said:

What there any right for your father to live there or was that absolute from your mother?

That would create a trust. which could be beneficial


There should be transferable nil rate bands to give more than £500k

Hi,

They were married and owned as tenants in common. Under a will trust we as beneficiaries (well he, I just went long with what he wanted!) did a DOA to transfer my mum's half of the property to me. All via a solicitor. So if any kind of trust was used at the first death, you cannot claim the transferable nil rate band on the second death. I could use the unused percentage of my mums nil rate band to add to the above allowance, but as I am quite a bit below, I don't see the point of building up a huge excess when there is no need.

Many thanks
 

Ali71

Keep_pedalling said:

Ali71 said:

Good morning,

I am about 80K give or take short of the maximum £500,000 including everything. I am the only beneficiary, and the house was already half in my name being made over to me as a beneficiary at the time of my mum's passing. Unfortunately that means I am liable for the full council tax for the year for that house (as well as mine) but it is what it is. And I've just realised I am going to have to reprint off a wadge of the iht 400 as I've forgotten to add the little refund of council tax he had for the year. Blast! Been told on another thread that it makes sense on the IHT404 (jointly owned assets) to put down 50% as my contribution to the property being that it passed to me and I am therefore the other owner so I'll go with that. This is giving me sleepless nights...........

Many thanks all for your help and patience!   

We’re you mum and dad not married? If they were you have a lot more to play with via the transferable NRBs.

Hi

Yes they were, but as i've just mentioned in another post I took on my mothers half via a will trust where as beneficiaries my Dad and i did a DOA to transfer her half of the property to me, (via a solicitor). So no transferable NRB.

Thank you. 

getmore4less

How long ago was this?

You inheriting just creates potential CGT liabilities if not living in the place, where a life interest trust sorts that out.

Ali71

Hi

The half share of the property was transferred to me in 2017,

Thank you.  

Ali71

Although I'm still not sure what to put on IHT404 as the contribution by each joint owner shown at fractions, and how that might affect anything. 

naedanger

Ali71 said:

Although I'm still not sure what to put on IHT404 as the contribution by each joint owner shown at fractions, and how that might affect anything. 

If you put down that your contribution was zero then HMRC might start thinking the ownership was in reality 100% your father's (since you would be saying he contributed everything) or they might think your ownership has arisen as a result of a gift with reservation of benefit from your father and they would then want to see that gift included in the IHT forms. Both these views would be wrong but could cause unnecessary questioning and delay from HMRC while they establish the true position i.e. your mother (very reasonably as spouse) contributed to half the ownership and you inherited that half from her - so it is fully correct to say your father's estate share is only half the property's value.

I think you are over worrying. It sounds like the estate's value is c. £420k and the IHT threshold for the estate is at least £500,000. So the estate is not in danger of paying IHT and HMRC are not going to spend much time on your forms. They will also only query things that they think are significant i.e. that might mean you have so underestimated the estate that it should be liable to IHT. So if you put the car down as an asset of the estate, or as a gift, or as a gift with reservation it is not going to make any signficant difference and HMRC is not going to query it - even if they think it should have been shown differently they will understand the forms were filled out with reasonable care. (It might be different if you didn't mention the car at all and they found out about it, since they then might think you had deliberately concealed an asset. But even then they might consider an honest mistake the most likely reason.)

Ali71

 naedanger said:

Ali71 said:

Although I'm still not sure what to put on IHT404 as the contribution by each joint owner shown at fractions, and how that might affect anything. 

If you put down that your contribution was zero then HMRC might start thinking the ownership was in reality 100% your father's (since you would be saying he contributed everything) or they might think your ownership has arisen as a result of a gift with reservation of benefit from your father and they would then want to see that gift included in the IHT forms. Both these views would be wrong but could cause unnecessary questioning and delay from HMRC while they establish the true position i.e. your mother (very reasonably as spouse) contributed to half the ownership and you inherited that half from her - so it is fully correct to say your father's estate share is only half the property's value.

I think you are over worrying. It sounds like the estate's value is c. £420k and the IHT threshold for the estate is at least £500,000. So the estate is not in danger of paying IHT and HMRC are not going to spend much time on your forms. They will also only query things that they think are significant i.e. that might mean you have so underestimated the estate that it should be liable to IHT. So if you put the car down as an asset of the estate, or as a gift, or as a gift with reservation it is not going to make any signficant difference and HMRC is not going to query it - even if they think it should have been shown differently they will understand the forms were filled out with reasonable care. (It might be different if you didn't mention the car at all and they found out about it, since they then might think you had deliberately concealed an asset. But even then they might consider an honest mistake the most likely reason.)

Bless you for that.

I can feel my blood pressure falling. Nothing I can do about my ruched under eye bags but hey ho. And the funeral's on Tuesday. So I think I will take note of your words of wisdom and start copying all the statements and bits that I need to attach to this thing and get it in the post. Not going to try to do any of this online - don't have enough paracetamol for that. Next stop, PA1P but will give it a couple of weeks before I send that off.


Many thanks for your help.