Could we avoid probate completely?

Shylock_249

There is just the two of us, NO children. We own our own home in joint names, we’ve made wills giving everything to each other on the first death and in the event of the last death everything goes to my wife’s two sisters.

I am nominated as the executor of my wife’s will, a solicitor to help my wife in the event of my death.

I could probably deal with probate by asking questions here and of my sister who did probate for our mother and her mother-in-law who both died intestate.

My wife would NOT be able to do probate on her own.

We have savings in joint accounts of £1.3 million, approx £535k is in shared taxable accounts the remainder, more or less half each in cash and stocks and shares ISAs – the majority in cash.

I believe that in the event of death the survivor of the joint accounts would just need to send a copy of the death certificate to the banks and they would change the account to just one name.

In the case of the cash ISAs I have 8 accounts with 7 different providers and one Stocks and shares ISA, my wife’s is similar. 

Speaking to a few of the providers they have stated that if the sum in the account is more than “x” thousand I’d need to go through probate.  In each case we have more than “x” in the account.

Our neighbour’s husband died during the pandemic, they had small ISAs and a joint savings account.  She had NO difficulty sorting out the affairs, just providing a copy of the death certificate etc, she didn’t have to do probate.

If we were to move the money from ISAs to taxable accounts in joint names and then when one of us dies just ask the bank to omit one name from the account and then avoid probate?

To make things even simpler we could put all the money in one account in NS&I which would assist us in completing SA something I sure will happen next year. 

I realise that in the event of the last survivor dying my wife’s sisters would have to obtain probate.

I might be wrong but I’m led to believe that there would be no need to pay IHT between the two of us because all assets automatically go to the spouse?

Any pointers and advice would be gratefully received. Thank you

Keep_pedalling

With the size of your estate your wife could easily afford to pay a professional to apply for probate, moving everything into joint accounts will loose all tax free ISAs and probably force you both into having to do annual tax returns.

On the second death there will be a very large IHT liability, I think it is time you stopped saving and start spending.

Who inherits of your sisters in law die first?

Marcon

Shylock_249 said:

There is just the two of us, NO children. We own our own home in joint names, we’ve made wills giving everything to each other on the first death and in the event of the last death everything goes to my wife’s two sisters.

I am nominated as the executor of my wife’s will, a solicitor to help my wife in the event of my death.

I could probably deal with probate by asking questions here and of my sister who did probate for our mother and her mother-in-law who both died intestate.

My wife would NOT be able to do probate on her own.

We have savings in joint accounts of £1.3 million, approx £535k is in shared taxable accounts the remainder, more or less half each in cash and stocks and shares ISAs – the majority in cash.

Instead of trying to arrange your lives with the main goal being to avoid probate, why not ensure there's help available for your wife (which seems to be the case) or you (should she pre-decease you) and keep the whole process as simple and painless as possible? 

There are some strident DIYs on this forum and they may often be correct, but clearly this is an issue of concern to you. You've got plenty of cash to buy professional help, and spending money on peace of mind is a perfectly laudable objective.

relaxtwotribes

Shylock_249 said:

I might be wrong but I’m led to believe that there would be no need to pay IHT between the two of us because all assets automatically go to the spouse?

No.  Only on the first death would there be no IHT to pay.  On the second death there would be IHT of (£1.3m - £0.65m) x 40% plus house value x 40%.

Shylock_249

Keep_pedalling said:

With the size of your estate your wife could easily afford to pay a professional to apply for probate, moving everything into joint accounts will loose all tax free ISAs and probably force you both into having to do annual tax returns.

On the second death there will be a very large IHT liability, I think it is time you stopped saving and start spending.

Who inherits of your sisters in law die first?

Thanks, it's almost certain that I'll have to do SA for both of us next year. This FY I estimate interest to be about 8.2k each but next year the interest will be higher due to higher interest rates.  Although I was initally worried about doing SA, having asked questions on this forum and having had to contact HMRC on the phone regarding them incorrectly totalling up the interest rates (added estimates to actualls) I should be able to sort it out earlier in the FY and NOT waste time on the phone to them.

I'm NOT too concerned about IHT when the last of us goes; both of my wife's sisters will still receive more money than they could ever have dreamed of.

The two sisters in law are much younger than my wife, one is a divorcee with no children, the other has three boys the youngest being 24.

I was on a spending spree for a couple of years just before the pandemic: three 2 week holidays to Mexico in a 5 star hotel, a 4 and 3 week holiday to India, 4 x one week to Krakow, 2 x 1 week holidays to Italy all within one year.  Then the wife had a stroke......

I think you've answered one question, that NO IHT would be paid when just the one of us goes.

Thanks again

Shylock_249

Marcon said:

Instead of trying to arrange your lives with the main goal being to avoid probate, why not ensure there's help available for your wife (which seems to be the case) or you (should she pre-decease you) and keep the whole process as simple and painless as possible? 

There are some strident DIYs on this forum and they may often be correct, but clearly this is an issue of concern to you. You've got plenty of cash to buy professional help, and spending money on peace of mind is a perfectly laudable objective.

Thank you.  I've actually produced a Doomsday Document, listing as much information as possible: Bank Accts (over 20 between us), account numbers, telephone numbers, credit cards, library cards, my military pension roll number, civil service pension roll number, library card, driving licence, passport Euro Health Card, Car Insurance Co, House Ins, Nectar, Land Registry etc and try to keep it up to date. With that I'd assume that the solicitor named on my wife's will as a helper should be able to sort it out but it won't be easy but at least there is a list!

We don't regret NOT having children but a 40 year old competent son/daughter would come in handy!

polar_pig

Shylock_249 said:

I'm NOT too concerned about IHT when the last of us goes; both of my wife's sisters will still receive more money than they could ever have dreamed of.

I think you've answered one question, that NO IHT would be paid when just the one of us goes.

No IHT after the first death, but a large IHT bill after the second. Part of that bill could be mitigated. 

Just a thought, but given what you've said above, have you considered a charitable donation on the second death to a good cause that means something to you, your wife or her sisters? That way 40% of the donation is saved from the tax man. Furthermore, if the donation is 10% of the estate or above the IHT tax rate reduces to 36%. The sisters would receive less money, but the charity could  receive significantly more money than the the sisters would lose.

https://arthurboyd.co.uk/giving-money-to-charity-to-save-inheritance-tax/#:~:text=One way to reduce the,can be particularly tax effective.

bompey

This won’t answer your question but have you discussed the inheritance with your wife’s sisters? You are likely giving them IHT issues with their estates and a bit of planning, such as giving directly to the nephews, could reduce the bill, or at least mean IHT skips a generation.

polar_pig

Furthermore, if the sisters pre-decease, all the estate could go to that good cause, saving all the IHT bill.

Savvy_Sue

Shylock_249 said:

We don't regret NOT having children but a 40 year old competent son/daughter would come in handy!

But you may well have three competent nephews! 

Shylock_249

polar_pig said:

Shylock_249 said:

I'm NOT too concerned about IHT when the last of us goes; both of my wife's sisters will still receive more money than they could ever have dreamed of.

I think you've answered one question, that NO IHT would be paid when just the one of us goes.

No IHT after the first death, but a large IHT bill after the second. Part of that bill could be mitigated. 

Just a thought, but given what you've said above, have you considered a charitable donation on the second death to a good cause that means something to you, your wife or her sisters? That way 40% of the donation is saved from the tax man. Furthermore, if the donation is 10% of the estate or above the IHT tax rate reduces to 36%. The sisters would receive less money, but the charity could  receive significantly more money than the the sisters would lose.

https://arthurboyd.co.uk/giving-money-to-charity-to-save-inheritance-tax/#:~:text=One way to reduce the,can be particularly tax effective.

Thank you. We had our wills drawn up by a solicitor under the free will system and indeed we have left money to The Stroke Assn and Marie Currie after the last one of us dies.