Do I need probate? And inheritance tax for my situation. 15 November 2022 at 2:44PM in Deaths, funerals & probate 10 replies 660 views

Vincentrussell

Hi everyone, 

My father recently passed and didn't leave a will. I'm calling solicitors at the moment and being qouted £5000 + which is alot of money for us at this time.

Trying to see of we can perhaps do the probate ourselves to bring the costs down, but honestly still griefing and need some advice from normal folk and share their experiences and perhaps get some perspective in regards to inheritance tax and potential pitfalls to navigate.

Here are the details in brief: 

1) My father’s second wife and four children (including me) survived him.

2) By the terms of the divorce settlement, half of the matrimonial home was recorded in 1993 as belonging to myself(tenets in common) was, held in trust, but never transfered over. Thus, only my father’s name appears on the legal title.

3) I estimate the property is worth in excess of £700,000.00. There is no mortgage.

4) My father also held approximately £10,000.00 in a bank account and a car.

5) We hope to split the home between the 4 children and my mother will I'm effect relinquish her part. However it depends what works better for us in regards to tax etc.

Thanks for any advice and feedback everyone.

Keep_pedalling

I am afraid your father was very foolish not to make a will. Under intestacy rules his wife inherits the first £270,000 of his estate and 50% of the rest. The remainder goes to his children, so you can’t do what your suggest in part 5. 

Does you mother still have copies of the financial settlement? If not you have an additional problem because you won’t be able to obtain copies as after all this time they will no longer be held.

IHT is not an issue as his estate is covered by spousal exemption and his NRB. 

handful

In your situation I would seriously consider the solicitor. £5k sounds a lot but in the grand scheme of things is not a big percentage of the value of the estate and the cost will be paid for before the beneficiaries are paid out so shared out to reduce the cost to you. It actually sounds cheap to me considering the potential complexity!  This will become all consuming if you aren't careful and you will have sleepless nights worrying if you have done everything you should have and if you've done it right. For those reasons I am about to hand over a similar sized but much simpler estate to a solicitor for a higher cost than you mention.

Keep_pedalling

handful said:

In your situation I would seriously consider the solicitor. £5k sounds a lot but in the grand scheme of things is not a big percentage of the value of the estate and the cost will be paid for before the beneficiaries are paid out so shared out to reduce the cost to you. It actually sounds cheap to me considering the potential complexity!  This will become all consuming if you aren't careful and you will have sleepless nights worrying if you have done everything you should have and if you've done it right. For those reasons I am about to hand over a similar sized but much simpler estate to a solicitor for a higher cost than you mention.

Although as the OPs step mother is the main beneficiary it is down to her rather than the OP to appoint a solicitor to administer the estate. The OP may require a solicitor to sort the potential mess regarding the divorce settlement but I don’t think the costs for that should come out of the residual estate. 

Vincentrussell

Thanks for everyone reply this far!

Apprently my father should have executed the transfer of the deed to me when I turned 18, but it didn't happen. So now th Estate will go to his spouse, so it up to my step-mum to do that. Again not sure what tax implications that will have for us. Anyone able to clarify, that would be much appreciated. Also been told by 1 solicitor, we don't need probate... Whilst the others have included that when qouteing me the £5000+ fees they charge. Lucky we have all the paperwork... But still so confusing.. 

Keep_pedalling

It sounds like you don’t need letters of administration (the equivalent of probate where their is no will), and there will be not IHT issues as the estate is covered by exemptions.

Do you have a good relationship with your step mother? If so it is probable best to work together on winding up the estate and getting financial settlement formalised. 

Does she have children of her own?

macman

There are no tax implications for you: any tax due is paid by the estate, not the beneficiaries. But, from the details given there is no IHT liability on this estate. The bank may or may not require probate/LoA to release the funds, policies vary bank by bank, so you just need to ask them.

Vincentrussell

Hi everyone, thanks again for your help. So im currently with the solicitors and he has suggested i need a surveyor to give a valuation of the house. Ive checked costs and its alot of money for us in this time. Just need a second opinion, to understand if thisbis required by law? Like can I just use a estate agents?

A just to clarify again, the solicitor is helping with the title deeds and my father's estate, who didn't leave a will. Thanks 

Keep_pedalling

The solicitor is being cautious but usually where the estate is well below the IHT threshold a paid for RICS survey is not required. There is no law saying you have to it just makes it a lot less likely that you will be open to an HMRC challenge on the valuation. 

Savvy_Sue

You can use just estate agents, best of three, but this can cause complications if you're near or above the IHT rate - HMRC may query the value if you're just below. Also if the house is to be sold, and it ends up going for a higher price than anticipated, you can end up in Capital Gains Territory. 

Whereas HMRC are far less likely to argue with a RICS survey. 

Phone around and get prices: we found someone (part of an estate agency) who did probate valuations for free, because he didn't like to charge in this situation. Obviously he hoped we'd send the business his way in due course. But prices may well vary. 

Also this is a valid charge to the estate, which could be reclaimed as soon as any liquid assets are available. 

getmore4less

If there is only a deceased person as the legal owner then a grant of administration will be required.

If there is a living legal owner grant not required to deal with the property.

The benefitial interests will be determined by the terms of the trust set up.

If there was a life interest that will complicate the tax situation.