Dealing with Brother's Estate and Company

concorde

Dear All,

I would be very grateful for any advice regarding the recent passing of my brother and the handling of his estate.

He did not have a will and was married with 2 young children (both under 7 years old).

He owned the house (very small amount outstanding on the mortgage) and was the only name on the deeds (he bought the house before getting married and had not got round to adding his wife to the deeds). He also had savings in his name.

He worked as a contractor and both himself and his wife are named as shareholders of the company through which he provided his services.

As I understand it, under intestacy rules the first £322,000 of his estate will pass to his wife plus 50% of the remainder of the estate. The other 50% of the remainder will pass to their 2 children.

If the IHT threshold is £325,000, is it correct to say that IHT would only be due if the 50% remainder going to the children exceeded this threshold? In which case his estate would have to be worth at least £972,000 (where 0.5 * (estate – 322,000) > 325,000)?

With regard to his company, can this be wound up before probate is granted? His wife is listed as both a shareholder and director of the company.

Finally, we have tried to piece together his various savings accounts from paper statements in the house – we do not have access to his emails or his computers. Say he has internet savings accounts we are unaware of but they later come to light (after the estate has been valued for IHT purposes), would it be possible to provide an updated valuation to HMRC later on?

Many Thanks in advance.

Keep_pedalling

concorde said:

Dear All,

I would be very grateful for any advice regarding the recent passing of my brother and the handling of his estate.

He did not have a will and was married with 2 young children (both under 7 years old).

He owned the house (very small amount outstanding on the mortgage) and was the only name on the deeds (he bought the house before getting married and had not got round to adding his wife to the deeds). He also had savings in his name.

He worked as a contractor and both himself and his wife are named as shareholders of the company through which he provided his services.

As I understand it, under intestacy rules the first £322,000 of his estate will pass to his wife plus 50% of the remainder of the estate. The other 50% of the remainder will pass to their 2 children.

That is correct.

If the IHT threshold is £325,000, is it correct to say that IHT would only be due if the 50% remainder going to the children exceeded this threshold? In which case his estate would have to be worth at least £972,000 (where 0.5 * (estate – 322,000) > 325,000)?

Also correct, although if his estate is bigger than that you may be able to use his Residential NRB. 

With regard to his company, can this be wound up before probate is granted? His wife is listed as both a shareholder and director of the company.

Yes, she can wind up the company, the same way a larger company could do with the loss of any individual shareholder. Any assets need to be split between her and her husband’s estate based on their individual share holding. 

Finally, we have tried to piece together his various savings accounts from paper statements in the house – we do not have access to his emails or his computers. Say he has internet savings accounts we are unaware of but they later come to light (after the estate has been valued for IHT purposes), would it be possible to provide an updated valuation to HMRC later on.

Yes, you can pay IHT on any assets that subsequently come to light later. A Lloyds account belonging to my wife’s uncle came to light 7 years after his death and the executor paid IHT before distributing it to her. 

relaxtwotribes

Regarding the company, I would have thought that, in order for it to go into a Members Voluntary Liquidation a shareholders resolution must be passed by a majority.  So, only if his wife owns more than 50% would that be possible before Letters of Administration.

polar_pig

Your IHT calculations look correct, but check with the Q&A here:

https://www.gov.uk/inherits-someone-dies-without-will
and
https://www.gov.uk/valuing-estate-of-someone-who-died/estimate-estate-value#use-the-online-inheritance-tax-checker

Regarding the contractor's company I'd suggest you speak to the accountant. Find out who was doing the book keeping, the accountant, a book keeper, contractor himself/wife. Find the details of the company bank account and get a statement. Is the wife an authorised signatory for the bank account? Find out whether there are any creditors & debtors (e.g. had he invoiced for all his work to date and had all the invoices been paid, are any taxes due to HMRC (PAYE, CT, VAT etc.). The bills need paying and the monies due to the company need collecting. The wife should be able to continue to draw a salary on the company (if she does so already), whilst it operates. As a director she might be able to take a dividend (she partially owns the company) according to the share split between them. This should also determine the percentage split of the company that falls into the husbands estate. The accountant should be able to advise and do all/most of this including winding up the company and determine the deceased estate value of the company.

Savvy_Sue

You could use https://www.mylostaccount.org.uk/ and also https://www.gretel.co.uk/ to try and track down accounts - Gretel may offer a wider range if there's anything else you're concerned about - pensions, for example. 

Keep_pedalling

relaxtwotribes said:

Regarding the company, I would have thought that, in order for it to go into a Members Voluntary Liquidation a shareholders resolution must be passed by a majority.  So, only if his wife owns more than 50% would that be possible before Letters of Administration.

The husband’s shares will be under the control of the administrator of his estate (presumably his wife) so they can act without the need to obtain probate first.  

relaxtwotribes

Keep_pedalling said:

relaxtwotribes said:

Regarding the company, I would have thought that, in order for it to go into a Members Voluntary Liquidation a shareholders resolution must be passed by a majority.  So, only if his wife owns more than 50% would that be possible before Letters of Administration.

The husband’s shares will be under the control of the administrator of his estate (presumably his wife) so they can act without the need to obtain probate first.  

Thanks, but that confuses me.  There is no Will so the wife (presumably) will apply for Letters of Administration and be able to deal afterwards.  

concorde

Thank you all for your replies - this is much appreciated.

@polar_pig - My sister-in-law will see my brother's accountant as you suggest. I'll check with her to find out if she is an authorised signatory for the company bank account.
 

Marcon

relaxtwotribes said:

Regarding the company, I would have thought that, in order for it to go into a Members Voluntary Liquidation a shareholders resolution must be passed by a majority.  So, only if his wife owns more than 50% would that be possible before Letters of Administration.

Starting point is to check the company's Articles of Association, downloadable free https://www.gov.uk/get-information-about-a-company

concorde

Thanks again everyone for your replies above.

Just to update, my sister-in-law has said that the accountant is helping her with the process of winding up the company.

I have another question if anyone can help. He had two defined contribution pension pots, one of which did not nominate anyone as the beneficiary - does this mean that the value of this pot would need to be included in the value of his estate for IHT purposes? (FYI, he had not withdrawn any money from either pension as he was aged 45 at death).

Many Thanks.

polar_pig

Glad to hear that the accountant is on the case.

The DC pension should be outside his estate, irrespective of whether he named a beneficiary. Contact the pension provider and explain the situation. They are most likely to pay the value of the pension to his wife as next of kin.