Understanding my late grandmas will

darrend2812

Hi all,

I was hoping I can gain some understanding to my grandmas estate relating to some topics I cant seem to find the answer to only. 

Briefly, my grandma passed away in 2019 leaving behind her residential estate to her 4 grandchildren. 

We do have probate and the property was valued at £395k, 

Looking at Gov.uk website - the threshold is £500k therefore are we exempt from paying any inheritance tax? 

"If you own your home (or a share in it) your tax-free threshold can increase to £500,000 if:

• you leave it to your children (including adopted, foster or stepchildren) or grandchildren"

 
Second question, do we need to pay any capital gains ?


Thirdly, do we now own my grandmas property? 

Thanks in advance, 

SiliconChip

Taken at face value you're below the IHT threshold, but you say "the property was valued at £395k", was that the only item with a value in the estate or was there anything else (money, shares, goods, etc.), as it's the total value of the estate that has to be used for IHT?

As for CGT, it's certainly possible that the property has increased in value over the lats 4 years, so that increase might be subject to CGT. The main factor are what's going to happen to the property now (is it going to be sold, is one of the beneficiaries going to live there, something else?) and has the property been occupied or empty since your grandma died.

As to who owns it, it sounds at the moment like the estate still owns it, with the executors having the ability to act for the estate in whatever you want to do next with the property.

If your plan is to sell I'd suggest that getting a decent conveyancing solicitor lined up and asking them some of these questions might be a good idea.

darrend2812

@SiliconChip - Thanks for the response, 

£395k was the total assets from the estate incl. money etc. 

Currently we do not wish to sell the property as my uncle-in-law still lives in the property. 

If we are above the IHT threshold as it's likely the value of the property has increased, do we need to pay this upfront forcing us to sell the property as we don't have a spare 10's-thousands for this?

Brie

As I understand it CGT isn't payable until the property is sold.  So nothing to pay right now (happy to be corrected on this!)

But if UiL lives in a property that you (& others) own then you are landlords/ladies and need to ensure all that side of stuff is dealt with correctly.  Maybe he's not paying rent but as it's your property you need to maintain it and ensure it's got all the safety stuff in place.

darrend2812

Thank you @Brie  

Both my aunt and uncle were living in my grandmas property but sadly my aunt (my grandmas daughter) very recently passed away so we're all trying to understand what process we need to follow.

We were granted probate on my grandmothers estate a year and a half ago. Currently we do not wish to sell the property but my concern is paying any IHT prior to selling. 

Brie

Get it valued and then you can see what kind of money might be talked about.  I don't think there's any IHT if the value at the date of death was under £500k. 

So CGT may be paid when the house is eventually sold but that would be on the difference between the value at date of death (or an educated estimate I suppose based on neighbourhood evidence) and the actual sale price.  So maybe CGT on £100k??  Depending on the local market?? 

p00hsticks

darrend2812 said:

@SiliconChip - Thanks for the response, 

£395k was the total assets from the estate incl. money etc. 

Currently we do not wish to sell the property as my uncle-in-law still lives in the property. 

If we are above the IHT threshold as it's likely the value of the property has increased, do we need to pay this upfront forcing us to sell the property as we don't have a spare 10's-thousands for this?

You say you already have probate - in order to achieve this you (or rather the executor) would have had to have the estate  valued (which you say came to £395k) and pay any IHT due (which was likely to be little of any) so I don't think you need to be worrying about IHT now as you are past that point. 

Were your aunt and uncle living with your grandmother at the time of her death and if so, did her will make any provision for them to continue to live there for any time ? (this may impact on what, if any,  CGT will be due if and when the property is eventually sold. 

darrend2812

@p00hsticks - The provision was for my aunt to live in the property for as long as she wants after my grandmothers death, however on her death the property would need to be sold. 

p00hsticks

darrend2812 said:

@p00hsticks - The provision was for my aunt to live in the property for as long as she wants after my grandmothers death, however on her death the property would need to be sold. 

I have a feeling that because of that clause, the starting point for a CGT calculation may be the value at the time of your aunts death, rather than that of your grandmother. But don't take my word for it as I may be incorrect - hopefully more knowledgeable people on this board may be able to expand on this. 

Sarahspangles

darrend2812 said:

@p00hsticks - The provision was for my aunt to live in the property for as long as she wants after my grandmothers death, however on her death the property would need to be sold. 

Are some of the grandchildren who have inherited (your cousins) the children of your uncle who currently lives there?

darrend2812

@p00hsticks
@Sarahspangles - No, my aunt and uncle sadly never had children therefore the property is to be shared with my grandmothers grandchildren - 4 of us in total.