Valuation for probate - gifts and assets held in trust?

waveyjane

I'm doing the online probate form for my father's estate. He had a will and is survived by his wife.

When it says "What are the values of the estate for probate?" it asks for "Gross value in £", it also says:

This is the total value of the deceased’s assets in their sole name.

To work this out, subtract the values of any joint assets passing to the other joint owner, foreign assets, all gifts and assets held in trust from the gross value of IHT.

In the previous section, I gave the gross estate value for IHT so I know that.

My first quesiton is about the wording "all gifts and assets held in trust". 

Does that mean "all gifts, and assets held in trust" or is it referring to some obscure type of gift that can be made in a trust (that is a "gift held in a trust")? I'm assuming it's two separte things though - yes? But commas, people!

My second question is about the trust. My father's will has a Nil Rate Band Discretionary Trust, which says (I think) that an amount of cash up to the value of the Nil Rate Band can be managed and distribtued to benficiaries by the named trustees pretty much how they want (subject to a loose letter of wishes). 

So, do I subtract the value of that trust? So this makes the "Gross value in £" equal to:

- All assets in his sole name
- Less the value of gifts above the allowance (made inside 7 years)
- Less the value of the NRBDT (ie £350,000)?

Oh and also, the house they have and and BTL are both held as "tenants in common" (not the more usual "joint tenants") 50/50. Does that mean I treat his half of those properties as assets in his name only? I think in the case of joint tenants the houses would not be part of the Gross value as they would pass to my mother?

Thanks for any help! 

Keep_pedalling

waveyjane said:

I'm doing the online probate form for my father's estate. He had a will and is survived by his wife.

When it says "What are the values of the estate for probate?" it asks for "Gross value in £", it also says:

This is the total value of the deceased’s assets in their sole name.

To work this out, subtract the values of any joint assets passing to the other joint owner, foreign assets, all gifts and assets held in trust from the gross value of IHT.

In the previous section, I gave the gross estate value for IHT so I know that.

My first quesiton is about the wording "all gifts and assets held in trust". 

Does that mean "all gifts, and assets held in trust" or is it referring to some obscure type of gift that can be made in a trust (that is a "gift held in a trust")? I'm assuming it's two separte things though - yes? But commas, people!

That is referring to trusts that your father was a beneficiary of not trusts his will creates.

My second question is about the trust. My father's will has a Nil Rate Band Discretionary Trust, which says (I think) that an amount of cash up to the value of the Nil Rate Band can be managed and distribtued to benficiaries by the named trustees pretty much how they want (subject to a loose letter of wishes). 

So, do I subtract the value of that trust? So this makes the "Gross value in £" equal to:

- All assets in his sole name
- Less the value of gifts above the allowance (made inside 7 years) Yes
- Less the value of the NRBDT (ie £350,000)? No 

Thanks for any help! 

It sounds like this is a very old will,  Nil Rate Band Discretionary Trusts were virtually made redundant in with the introduction of the transferable NRB in 2007, so it may be a lot simpler for the beneficiaries of the trust to forego it and let your mother receive his entire NRB that will then increase her estates exemptions by £325k. Discretionary trusts are a pain to manage and are subject to high rate of taxation.

I think you would be well advised to take professional advice.

waveyjane

Ah, thanks for clarifying the trust thing. And yes, we're going to sit down with solicitors about whether to keep that (there are pros and cons). 

BTW I just edited my question (you were too quick!) about the properties being tenants in common. Do you know about that?

Keep_pedalling

waveyjane said:

Ah, thanks for clarifying the trust thing. And yes, we're going to sit down with solicitors about whether to keep that (there are pros and cons). 

BTW I just edited my question (you were too quick!) about the properties being tenants in common. Do you know about that?

Yes his share of the properties should be treated as sole assets.

A IPDI (Immediate post-death interest) trust may be more appropriate than the NRB trust, this will provide his wife (your mother?) with security and protect  your  fa there’s inheritance without any negative tax. Implications.

Wingnut1001

I have the same question regarding what to subtract from the Gross Value for IHT to get the Gross Estate Value for Probate!

My wife recently died and we owned our house as Tenants in common 50/50. I now have the right to live there till I die from her will. I understand that it goes into trust. But does the half value of the house get subtracted? What did your solicitor advise?

Keep_pedalling

Wingnut1001 said:

I have the same question regarding what to subtract from the Gross Value for IHT to get the Gross Estate Value for Probate!

My wife recently died and we owned our house as Tenants in common 50/50. I now have the right to live there till I die from her will. I understand that it goes into trust. But does the half value of the house get subtracted? What did your solicitor advise?

It is not really the same question, what you are describing is an immediate post death interest trust, and you become the beneficial owner of her share until your death. Unlike a NRBDT her share of the bequest is covered by spousal exemption and on your death all of the house will form part of your estate for IHT purposes.

Her half of the house still forms part of her estate for both IHT and probate purposes event though it is exempt from IHT. On your death the whole house is part of your estate for IHT purposes only.

ahfat41

Keep_pedalling said:

Wingnut1001 said:

I have the same question regarding what to subtract from the Gross Value for IHT to get the Gross Estate Value for Probate!

My wife recently died and we owned our house as Tenants in common 50/50. I now have the right to live there till I die from her will. I understand that it goes into trust. But does the half value of the house get subtracted? What did your solicitor advise?

It is not really the same question, what you are describing is an immediate post death interest trust, and you become the beneficial owner of her share until your death. Unlike a NRBDT her share of the bequest is covered by spousal exemption and on your death all of the house will form part of your estate for IHT purposes.

Her half of the house still forms part of her estate for both IHT and probate purposes event though it is exempt from IHT. On your death the whole house is part of your estate for IHT purposes only.

I do not understand “On your death the whole house is part of your estate for IHT purposes only” her half of the house still forms part of the estate for IHT purpose and probate. My understanding when the other person died the whole house should be declared not his half. I do not know whether I have made myself clear. E.G life interest trust, my wife died I declare half of her share and when I die my executor must declare the whole house as part of my estate not half. Sorry in a muddle. When the time comes will contact a solicitor. Thanks

Keep_pedalling

ahfat41 said:

Keep_pedalling said:

Wingnut1001 said:

I have the same question regarding what to subtract from the Gross Value for IHT to get the Gross Estate Value for Probate!

My wife recently died and we owned our house as Tenants in common 50/50. I now have the right to live there till I die from her will. I understand that it goes into trust. But does the half value of the house get subtracted? What did your solicitor advise?

It is not really the same question, what you are describing is an immediate post death interest trust, and you become the beneficial owner of her share until your death. Unlike a NRBDT her share of the bequest is covered by spousal exemption and on your death all of the house will form part of your estate for IHT purposes.

Her half of the house still forms part of her estate for both IHT and probate purposes event though it is exempt from IHT. On your death the whole house is part of your estate for IHT purposes only.

I do not understand “On your death the whole house is part of your estate for IHT purposes only” her half of the house still forms part of the estate for IHT purpose and probate. My understanding when the other person died the whole house should be declared not his half. I do not know whether I have made myself clear. E.G life interest trust, my wife died I declare half of her share and when I die my executor must declare the whole house as part of my estate not half. Sorry in a muddle. When the time comes will contact a solicitor. Thanks

It can be difficult to get you head around this so I will try to make the situation clearer.

On your wife’s death her half went into the immediate posts death interest trust and it does form part of her estate, however at this point the eventual beneficiaries (remaindermen) are not the beneficial owners, you, as the life tenant, are the beneficial owner.

Because beneficial ownership passes to a spouse, it is covered by spousal exemption therefore it is not subject to IHT and none of her NRB or RNRB is used so that can all be transferred to your estate on your death.

On your death your share forms part of your estate as does the half in trust because you were the beneficial owner and it was not subject to IHT on her death.

For taxation purposes the outcome is the same as if she left you her share directly to you, both for IHT and CGT.

ahfat41

Thank you very much for taking time to explain this to me. I do understand now.