Starting probate - total IHT threshold

jackie201616

I am planning to apply for probate myself as executor and i'm only beneficiary. When my mother passed away 11 years ago 2 part properties were put in trust for me at the time due to inheritance tax planning at the time. IHT has since changed but the wills mirrored remained the same.
Am I right in now thinking for probate purposes I will only provide the 50% value of property 1 and 33.3% value of property 2 (this was how it was split as myself mother and father all owned a third and mothers passed over to me in trust at her death) and also for tax purposes I am entitled to 325000 tax free, 175000 tax free as passing father to daughter but am I read previously about using my mothers 175000 as she passed away prior to these changes.... slightly confused, thank you

Keep_pedalling

11 years ago the transferable nil rate band had been in place for 3 years so putting your mother’s share of the properties in trust seems an odd thing to do, and somewhat complicates things now and you should to take professional advice with regard to the trust. According to a previous thread you said it is a discretionary trust which are subject to some eye watering taxation rules.

As well as the NRB, your father’s estate can make use of his residential NRB giving you an exemption of £500k. Any of your mother’s unused NRB can also be transferred but some or all of that will have been used in setting up the trusts. The residential NRB did not exist at the time if your mother’s death but could be transferred to his estate providing his share of his primary residence exceeds £175k.

What was the value of the trust set up by your mother’s will?

You will have a second tax issue in that your share of either property will be subject to capital gains tax, unless it happens to be your primary residence.

jackie201616

This was a discretionary trust ( I was trying to find my previous post but couldn't locate it!), one being the main residence which was half the value at the time and the other being a second home this my mums complete share 1/3. The share of both properties at that time made up my NRB inheritance for tax planning purposes as in the will back in 2009.
I haven't seen anything relating to taxation rules surrounding a discretionary trust? Can you advise? 
I don't want to employ the use of a solicitor with their ridiculous fees, would an accountant be able to advise the best way to go?
Potentially would I then have 675k for both mother and father residential and dad nrb?

Keep_pedalling

jackie201616 said:

This was a discretionary trust ( I was trying to find my previous post but couldn't locate it!), one being the main residence which was half the value at the time and the other being a second home this my mums complete share 1/3. The share of both properties at that time made up my NRB inheritance for tax planning purposes as in the will back in 2009.
I haven't seen anything relating to taxation rules surrounding a discretionary trust? Can you advise? 
I don't want to employ the use of a solicitor with their ridiculous fees, would an accountant be able to advise the best way to go?
Potentially would I then have 675k for both mother and father residential and dad nrb?

I would not hang over the process to a solicitor but I would consult an accountant who is qualified to deal with trusts, as making a mistake here could be very expensive.

It was unfortunate that your parents wills became obsolete within a year of making it with the changes to the NRB rules. A trust that was set up to save tax could now actually do exactly the opposite. Unfortunately because many people never review their wills there are still lots of those obsolete wills in place.