Estate left to sister in Will - ISA and allowance

nuttyrockeress

My uncle passed away back in February.

We've gone through probate and are expecting the grant any day now.

There is no property involved and savings under £55k - £22k of the savings is in an ISA.

Will my mum as executor (and only beneficiary) need to open an ISA to receive the £22k that's in the ISA currently and will she need to pay tax as over the £20k allowance or does it get transferred over to her to as executor and only beneficiary?

We've done probate ourselves online - not done anything like this before so sorry if this is a silly question.

Thank you in advance for any help or advice you can offer - I can't find anything straightforward online in relation to passing to a sister.

BooJewels

When I executed an estate that had an ISA, the bank just transferred a sum into the account I'd given them that I was using for the estate.  The sum was made up of her current account balance, the principle from the ISA (only a modest amount) and the very modest interest the ISA had earned since it was a last paid.  I just added it to the estate pot and after all bills and expenses were covered, distributed it to the beneficiaries.

Why did you need Probate if there was no property - was it the body holding the ISA or the other savings that asked for it?

nuttyrockeress

BooJewels said:

When I executed an estate that had an ISA, the bank just transferred a sum into the account I'd given them that I was using for the estate.  The sum was made up of her current account balance, the principle from the ISA (only a modest amount) and the very modest interest the ISA had earned since it was a last paid.  I just added it to the estate pot and after all bills and expenses were covered, distributed it to the beneficiaries.

Why did you need Probate if there was no property - was it the body holding the ISA or the other savings that asked for it?

He had three accounts, one flex account and one easy access alongside the ISA.  This took him over the amount for that banks allowance without grant of probate.

BooJewels

nuttyrockeress said:

BooJewels said:

When I executed an estate that had an ISA, the bank just transferred a sum into the account I'd given them that I was using for the estate.  The sum was made up of her current account balance, the principle from the ISA (only a modest amount) and the very modest interest the ISA had earned since it was a last paid.  I just added it to the estate pot and after all bills and expenses were covered, distributed it to the beneficiaries.

Why did you need Probate if there was no property - was it the body holding the ISA or the other savings that asked for it?

He had three accounts, one flex account and one easy access alongside the ISA.  This took him over the amount for that banks allowance without grant of probate.

That's a shame - I was lucky with the one I mentioned, as it was her only source of funds, but over the Probate threshold they told me and they made a judgement call and allowed it to be sorted without waiting for Probate - which we needed anyway to sell the house.  

Runner_Duck

I'm pretty sure that you can only transfer an ISA between a spouse or civil partner.  Any one else just gets the cash without the tax free wrapper.  Your Mum can open her own ISA once she has received the cash but you can only invest £20K per year in an ISA.

polar_pig

Runner_Duck said:

I'm pretty sure that you can only transfer an ISA between a spouse or civil partner.  Any one else just gets the cash without the tax free wrapper.  Your Mum can open her own ISA once she has received the cash but you can only invest £20K per year in an ISA.

Yes, only spouse or civil partner can open an "Inheritance ISA". Otherwise have to take the inherited cash and use your own allowance if you want to put it (up to £20k currently) in an ISA.

https://www.nationwide.co.uk/savings/help/inherited-isa-allowance-explained/

nuttyrockeress

So if she doesn’t want to put in an ISA is it tax free? Not sounding off but she has plans for her house so an ISA wouldn’t be necessary. Thanks 

poppystar

all the tax earned to date will be tax free until the point the ISA is cashed in

polar_pig

It remains tax free until the first of:
the executor closes the account, estate administration is completed or 3 years and 1 day after the death of the original holder. The latter might be a nice perk in some scenarios when the cash is not needed within 3 years.

https://www.gov.uk/individual-savings-accounts/if-you-die

Interestingly, if the uncle had had a living spouse upon death, the spouse would inherit £22k allowance and could make an "additional permitted subscription" of £22k to an ISA that year. This would mean the spouse could put £42k of their own money into an ISA that year whilst the sister still inherited the actual tax free cash in the ISA.

However I'm guessing the uncle didn't have a living spouse upon death in this case.

nuttyrockeress

polar_pig said:

It remains tax free until the first of:
the executor closes the account, estate administration is completed or 3 years and 1 day after the death of the original holder. The latter might be a nice perk in some scenarios when the cash is not needed within 3 years.

https://www.gov.uk/individual-savings-accounts/if-you-die

Interestingly, if the uncle had had a living spouse upon death, the spouse would inherit £22k allowance and could make an "additional permitted subscription" of £22k to an ISA that year. This would mean the spouse could put £42k of their own money into an ISA that year whilst the sister still inherited the actual tax free cash in the ISA.

However I'm guessing the uncle didn't have a living spouse upon death in this case.

He never married so no one surviving him other than mum