Is probate necessary?

scaredm

poppystar said:

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. 

She's divorced.  Ex still alive but very much estranged.  Not in the will.

poppystar

scaredm said:

poppystar said:

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. 

She's divorced.  Ex still alive but very much estranged.  Not in the will.

Ok, so there is no transferable allowance from him.

Which means she has her £325k allowance. 

Your will need to claim the residential nil rate band to cover the remainder. This means you will have to complete IHT forms as well as apply for Probate. The nil rate band can be up to £175k - which is where Martin’s £500k comes from - but you will only be able to claim the actual value as it is less than this. This will give her a total allowance of £325k plus £127k using your figures. No way round this, you will have to complete IHT forms in order to claim. 

Again who is in the Will is not relevant here. 

I’m assuming all financial arrangements re the divorce have previously been settled and the ex has no claim on anything. 

Hope this helps make it a bit clearer

scaredm

So, am I correct in understanding that we will need to complete the IHT forms BUT there will be no tax to pay as we will claim the Residential Nil Rate Band?  

Keep_pedalling

scaredm said:

So, am I correct in understanding that we will need to complete the IHT forms BUT there will be no tax to pay as we will claim the Residential Nil Rate Band?  

That is correct

scaredm

Keep_pedalling said:

scaredm said:

So, am I correct in understanding that we will need to complete the IHT forms BUT there will be no tax to pay as we will claim the Residential Nil Rate Band?  

That is correct

So, am I right in thinking we do this, in this order:

Complete the IHT forms
Apply for probate
Get probate.
Dish out the savings to those given cash lump sums.  Divide the remaining cash between the two main beneficiaries.
Sell the property.
Split the income from the sale of the house between the two main beneficiaries.

Flugelhorn

scaredm said:

Keep_pedalling said:

scaredm said:

So, am I correct in understanding that we will need to complete the IHT forms BUT there will be no tax to pay as we will claim the Residential Nil Rate Band?  

That is correct

So, am I right in thinking we do this, in this order:

Complete the IHT forms
Apply for probate
Get probate.
Dish out the savings to those given cash lump sums.  Divide the remaining cash between the two main beneficiaries.
Sell the property.
Split the income from the sale of the house between the two main beneficiaries.

Nearly right!

Complete IHT
apply for probate 
Get Probate

gather in estate ie sell property etc & advertise in gazette for any creditors (unless you know finances really well and don't feel the need

then hand out lump sums and divide estate 

you can distribute some cash before selling the property if feel confident that there is enough held back to deal with any expenses / unknown debts etc 

scaredm

Thank you so much.

But, gosh, this is so complicated to a complete novice.  When you say "advertise for any creditors" what does this mean exactly in layman's terms?

Brie

scaredm said:

Thank you so much.

But, gosh, this is so complicated to a complete novice.  When you say "advertise for any creditors" what does this mean exactly in layman's terms?

There's an official way to advertise but you might want to start by checking her credit report for anything really obvious.

scaredm

Brie said:

scaredm said:

Thank you so much.

But, gosh, this is so complicated to a complete novice.  When you say "advertise for any creditors" what does this mean exactly in layman's terms?

There's an official way to advertise but you might want to start by checking her credit report for anything really obvious.

Do you mean obvious debts or obvious assets?  She left a list of all her bank account details and reference numbers for Premium Bonds.  She had no loans that we know of.  There is certainly nothing other than bills coming out of her bank account.

scaredm

Brie said:

scaredm said:

Thank you so much.

But, gosh, this is so complicated to a complete novice.  When you say "advertise for any creditors" what does this mean exactly in layman's terms?

There's an official way to advertise but you might want to start by checking her credit report for anything really obvious.

p.s.  Can a solicitor, if left to deal with probate etc, do all this?