Funeral savings 6 October 2022 at 2:57PM in Deaths, funerals & probate 3 replies 284 views

ednabucket

In 2017 my wife's mother asked me to hold £6000 for her to pay for her funeral. I opened a new bank account in my name and transferred the money into it without a thought. It's been sitting there since, earning about threepence a year in interest. My mother in law passed away recently and the funds paid her funeral expenses as intended.
I am now dealing with her estate as one of the executors and I am not sure how I should handle this when reporting for Inheritance tax.
The sole intention of the fund was for funeral costs but will I have to record this as a gift? The estate is likely to total less than £500k and my wife and her sister are claiming RNRB. 
Thanks 

Robin9

I don't this is a gift - it's part of her estate (even though its in your name)

BooJewels

My father set up a joint account each with my sister and I on the advice of his solicitor, when he set up LPAs, as they were starting to take a while to come through - this was purely in case any emergency cropped up before we had access to his own funds to pay for things.  Neither account was ever touched and on his death, we each inherited the contents as such, at bank level. 

BUT the amount in each was entered into the Probate forms in the section for the contents of joint accounts - I think there was a question about who had provided the funds, or what proportion of them.

We never considered they were our money in any shape, especially not a gift, they were always part of the estate and declared as such.  As it happens they ultimately became ours anyway and to date, I don't think either of us have yet touched them.  But had there been more beneficiaries than us, the funds would have just been moved to the estate account for distribution.

ednabucket

Thanks for the responses.

I rang the IHT helpline in the end as I had several questions besides this one. They advised that the value should be added to box 76: 'Other assets and income due to the deceased' with a note in 'Additional information', at the end of the document, to explain. So not a gift.