Grant of Probate and Deed of Variation without solicitor?

LarryR

Hi

So, my dad died just over a week ago and we have started to go through his affairs. I think it's pretty straightforward, but wanted to double-check a few points.

The facts: He was 80 years old, and married (50yrs) at the time he died. Two grown-up children; 4 grandchildren. All his accounts, bar one, were held in joint names. The one sole-named account was an ISA worth £70k at the Yorkshire Building Society. The house had no mortgage on it, and was in joint names. He had no debts. He left a simple will which just said his wife (my mum) was the sole beneficiary and executor, however, if she were no longer alive then it would be passed on to myself and my sister.

My mum would like the ISA to be split between my sister and I - do we need a deed of variation to enable this? Would there be any tax to pay on this?
In order to close the ISA account and withdraw the YBS money, will a grant of probate be required?
If we do need to do a deed of variation and/or a grant of probate, can this be done without a solicitor, as we would prefer not to pay their hefty hourly charges for such a small and simple estate?
Am I right that as everything is in joint names - bank accounts, house, credit cards, etc. we just need to inform them of the death and they will just remove his name and allow my mum to continue as is?

Thanks and apologies if these are silly questions.

poppystar

Not silly questions.

You will need to notify everyone on the joint accounts as well as utilities etc. Try to get through to their bereavement departments if they have one. They will then explain what needs to be done. Probably not much more than changing the name over once they’ve viewed the death certificate.

Probate will probably be required for the ISA at that amount but again contact YBS bereavement to check. 

You can definitely do probate on your own without solicitor and there are lots of people here who will help if needed.

As I understand it the ISA could be left as an ISA if it goes to your mother so she would get an additional ISA allowance for it. Might be worth bearing this in mind if keeping money tax free is important and she could gift money to you from elsewhere to the same amount. 

It is doubtful whether a DoV is really necessary rather than just gifting the money. Is your mother’s estate likely to end up over £1m? 

If you’ve used the Tell us Once service after registering the death then all the government departments should be aware and take whatever steps they need to and will contact you if necessary.

hope that helps

p00hsticks

Sorry for your loss.

There's no need to apologise, there are no silly questions - There is a first time for all of us and by definition it happens at a time when we aren;t necessarily thinking straight or at our best. I've found this board incredibly helpful, I hope you do too.

Looking at the YBS website, it sounds as if they want a grant of probate for any savings over £30,000. It might be worth double checking this with them to see if they have any leeway to override this limit if you point out that it's the only thing that you're going to need probate for; Note that they have a dedicated bereavement team to contact

https://www.ybs.co.uk/savings/help/bereavement/savings#closing-the-account

(in general you'll find that most big organisations like banks, utility comanies etc do - you can usually find the contact details on their websites; they'll be trained in what to do on someones death and in my experience can usually deal with things with one sympathetic phone call).  

I'm afraid I can't help with what's involved in setting up a DOV - there are others frequenting this board who are more knowledgeable than I.

However you may need to consider  whether it's really needed. As I understand it, the only significance of a DOV over the beneficiary simply giving the asset away is that with a DOV, for inheritance tax purposes it's as if it never been part of the original beneficiaries assets, while if they simpy give it away and die within 7 years it still forms part of their estate for IHT purposes.

But if your mothers estate is not going to be in IHT territory (and assuming that she intends to leave the house to direct descendants such as yourself, in your circumstances she would currently have an IHT allowance of close to £1 million) then as I understand it there really isn't going to be any material difference between distributing the money via a DOV or simply handing it over. Setting up the DOV may be more trouble than would subsequently accounting for the gift if your mother died within seven years.

LarryR

Thanks for your messages.

So am I understanding this correctly - are you saying that my mum 'inherits' my dad's IHT allowance, which applies at some point in the future? House is probably worth around the £700k mark currently, at a push (although, not sure what it'll be in 5-10-15 years' time?).

So, if she were to simply get the ISA transferred to her own ISA (no need for GoP) and then gift it to us, and if she were to not survive 7-years, then likely we would not pay any additional IHT/CGT/tax of any sort on it over if it were DoV'ed to us, the children?

poppystar

LarryR said:

Thanks for your messages.

So am I understanding this correctly - are you saying that my mum 'inherits' my dad's IHT allowance, which applies at some point in the future? House is probably worth around the £700k mark currently, at a push (although, not sure what it'll be in 5-10-15 years' time?).

So, if she were to simply get the ISA transferred to her own ISA (no need for GoP) and then gift it to us, and if she were to not survive 7-years, then likely we would not pay any additional IHT/CGT/tax of any sort on it over if it were DoV'ed to us, the children?

You may well still need a grant of probate to transfer into an additional ISA (it’s different to an ISA she might have at the moment) especially as not all institutions do provide such ISAs - again speak to YBS bereavement team.

Yes,  mum inherits dad’s allowance in full as long as he doesn’t leave anything to anyone else, which from what you’ve said he doesn’t. Also if the house comes to direct descendants when mum passes then Residential NRB also comes into play. Ie 2x £325k NRB and 2 x RNRB £175k = £1m

No, she can’t gift you an ISA - she would have to withdraw the money from its ISA status to do that. (I may have read the last part of your question wrong?). DoV would reduce the amount of the transferable NRB from dad to mum as it would be treated as your dad leaving you the money so that would then reduce the figure down from £1m by that amount. 

Secret2ndAccount

You don't need a DoV in this case. It would potentially make things worse! If you use DoV then you inherit 70k from your Dad. That 70k is gone from the NRB forever. Your Dad passes 430k of NRB to your Mum. So, eventually, your Mum's NRB is 930k instead of 1mil.  If your mum inherits the 70k, her NRB is 1 mil. She gifts you 70k. If she were to pass within 7 yrs, the 70k gift would be counted against the NRB, so you are in the same position as above (930k left to use). If she were to survive 7 years, her NRB goes back up to 1 mil, which could perhaps be useful if the house has gone up in value.
So slightly better off not using DoV

Keep_pedalling

Secret2ndAccount said:

You don't need a DoV in this case. It would potentially make things worse! If you use DoV then you inherit 70k from your Dad. That 70k is gone from the NRB forever. Your Dad passes 430k of NRB to your Mum. So, eventually, your Mum's NRB is 930k instead of 1mil.  If your mum inherits the 70k, her NRB is 1 mil. She gifts you 70k. If she were to pass within 7 yrs, the 70k gift would be counted against the NRB, so you are in the same position as above (930k left to use). If she were to survive 7 years, her NRB goes back up to 1 mil, which could perhaps be useful if the house has gone up in value.
So slightly better off not using DoV

Agree with this, a simple gift is the better option in this case. 

LarryR

Thanks so much for the info and advice, I am more comfortable with what we need to do now.

getmore4less

Lets deal with the DOV.

if mum gets everything there is no IHT(spouse exemption), the nil rate bands are transferable, subject to any deductions for existing PETs(non exempt gifts in the last 7 years)

If there is a DOV that takes assets out of the spouse exemption then they reduce the available transferable nil rate band.

In most cases it is better to keep the spouse exemption and transferable nil rate band, no DOV required.

Gifting  from the survivors estate then become PETs(7 years) if not covered by any gift exemption. 

From an estate planning there are more options not doing the DOV as you can utilise exemptions.

eg. mum has £3k year exemption, can back date 1y and the next year starts in April so over just 4 month £9k of exemptions are available.

 Retaining the ISA is probably a sensible option then review the options once you have an idea of the longer term income expense for mum.

LarryR

Have just been told by building society that in order to close the ISA and pay the balance to my mum we need to provide a copy of 'Grant of Probate' or 'Letters of Administration'. I rang them to ask if this was really necessary given the estate is really simple and no IHT is due. They said it is required by their legal team to meet some sort of regulation. In short, they're not going to waive it.

So now it seems we have to apply for probate, which will cost a few hundred pounds online and take 16+ weeks. How annoying.

Do we still need to get the property valued for probate, even though it is in joint names? Does the house even form part of his estate as it is owned outright and owned by both of them?

Thanks

Keep_pedalling

All the joint assets have to be included in the figures you supply but there is no need to get a paid for valuation for the house as it is covered by spousal exemption so apart from IHT the valuation is not going to be an issue with CGT in the future either. Either value it on recent sales of similar properties nearby or get an EA valuation.