Is probate necessary?

scaredm

Mother in law has recently died.

She owned her own home, although this is on a 75-25% shared-ownership basis with an "Independent Living" company.

She had savings totaling approx £225,000.

She has left some monetary gifts to grandchildren, but the rest is split between my husband and his brother.  The eldest sibling has been purposely left out of the will.  (We only discovered this the other day - we had thought everything would be split between all three siblings).

Do we need to get probate?

user1977

The house means you'll need probate anyway. And at that level of savings, I expect the bank(s) will want probate.

scaredm

That's what I suspected.  My husband is convinced that it isn't needed, based on what he'd read on the Gov.uk website.

user1977

scaredm said:

My husband is convinced that it isn't needed, based on what he'd read on the Gov.uk website.

What did he (mis)read?

poppystar

Is hubby getting confused between probate and IHT forms? It may be that it is an excepted estate and does not require the latter but as said above you will need probate for the property. 

scaredm

user1977 said:

scaredm said:

My husband is convinced that it isn't needed, based on what he'd read on the Gov.uk website.

What did he (mis)read?

I'm not entirely sure.  I'll ask him.

Keep_pedalling

What is the value of her home? If her estate needs to use the residential NRB then not only will probate be required a full IHT return will be needed as well.

scaredm

The full value of her home is £170k, but she only owns 75% of that (so £127500).

This added to her £220k savings takes it to an estate worth £347500.  She has left some cash lump sums to her grandchildren.  Now we're confused as to whether Inheritance Tax is due as it says on Martin's guide that if the home is left to children then the threshold for Inheritance Tax is £500k.  It's SO confusing!!

poppystar

scaredm said:

The full value of her home is £170k, but she only owns 75% of that (so £127500).

This added to her £220k savings takes it to an estate worth £347500.  She has left some cash lump sums to her grandchildren.  Now we're confused as to whether Inheritance Tax is due as it says on Martin's guide that if the home is left to children then the threshold for Inheritance Tax is £500k.  It's SO confusing!!

Did she have a husband who predeceased  her? If so, did he leave everything to her? If so his tax allowance would be transferable to her giving 2x£325k. If some went elsewhere then his £325k would be reduced by that but there may be enough to cover the extra £22500 she is over her limit. So no need for IHT forms but you will still need probate for the house and possibly banks.

If no husband and you want to claim the residential nil rate band (to cover the excess over her £325k) then you will need to complete IHT forms. Plus you will still need to get probate as well - for house/banks. 

Keep_pedalling

My question crossed with your new thread, so I posted a reply there.

poppystar

At this stage the gifts to grandchildren are not relevant it is the total estate she has before any bequests that matters.