Help with will and IHT

bevnhayley

Hi, sadly my mum has passed away recently.  She did leave a will, leaving her money to her 3 children and her half of her property to her partner until his death and then his money will go to his 2 children and the property is to be sold and divided up between the 5 children.

At this point does the house have to be valued and IHT paid by myself and 2 brothers, or does this happen when her partner dies, we have spoken to a solicitor who has asked for the house to be valued now, and I was just a bit confused by this as its not  part of her estate to be shared yet.

Thank you 

Savvy_Sue

It IS part of her estate, and setting the current value is needed to work out both immediate liability to Inheritance Tax and future possible liability to Capital Gains Tax.

You say her half of the property has been left to her partner: this sounds like a trust, and you need to understand the terms of it. For example, is there provision for maintenance? And for her partner to downsize if he wishes to?

Keep_pedalling

Assuming she was not married to her partner, then there are no spousal exemptions available and if IHT is due it will come from her estate not you and your sister. This could mean the house might have to be sold to meet the tax bill.

What is the approximate value of her estate and value of her house? If not married to her partner was she a widow? 

bevnhayley

she was windowed in the early 80’s

I have checked her will and it gives her partner right of residence in the house till he dies, which was bought 50-50.  I was just unsure if IHT would be paid on her half of the house now, or when it is eventually sold.

Its not an issue for us, and to be honest this is just something to keep me busy at the moment 😔

bevnhayley

also with her half of the property, her estate is about £600,000 ish

Keep_pedalling

bevnhayley said:

also with her half of the property, her estate is about £600,000 ish

With an estate of that size IHT is unlikely to be an issue. Your mother has a nil rate band (NRB) of £325k and assuming her husband left everything to her his full NRB can be transferred to her estate taking the exempt amount up to £650k. If you need more than that then there is also the residential NRB available.

bevnhayley

Sorry another question regarding the house, if there is any tax to pay on it would that be paid immediately or from any money left in her will before it is shared between the children. 

p00hsticks

Keep_pedalling said:

bevnhayley said:

also with her half of the property, her estate is about £600,000 ish

With an estate of that size IHT is unlikely to be an issue. Your mother has a nil rate band (NRB) of £325k and assuming her husband left everything to her his full NRB can be transferred to her estate taking the exempt amount up to £650k. If you need more than that then there is also the residential NRB available.

Note the OP is referring to her mothers 'partner' rather than 'husband', 'wife' or 'civil partner', so I don't think we can assume that, (however long standing) the relationship is neccesarily formal enough for the NRM to be transferable.

bevnhayley

I think they said that because my mum was widowed in the 80’s but had a partner when she died. 

Keep_pedalling

p00hsticks said:

Keep_pedalling said:

bevnhayley said:

also with her half of the property, her estate is about £600,000 ish

With an estate of that size IHT is unlikely to be an issue. Your mother has a nil rate band (NRB) of £325k and assuming her husband left everything to her his full NRB can be transferred to her estate taking the exempt amount up to £650k. If you need more than that then there is also the residential NRB available.

Note the OP is referring to her mothers 'partner' rather than 'husband', 'wife' or 'civil partner', so I don't think we can assume that, (however long standing) the relationship is neccesarily formal enough for the NRM to be transferable.

The OPs mother was a widow so her estate will have any unused NRB transferable from her husband.

Keep_pedalling

bevnhayley said:

Sorry another question regarding the house, if there is any tax to pay on it would that be paid immediately or from any money left in her will before it is shared between the children. 

IHT needs to be payed from the estate within 6 months of the death. Which part of her estate it comes from depends on the wording of the will but normally it will come from the residual estate.