Probate/inheritance tax

pants04

1 is 3/4 and 1 is 13....others are over 16

RAS

You've said minors and indicated under 16? 

Was the deceased based in Scotland?

In England, the age of majority is 18 years.

Keep_pedalling

Any inheritance for minors must be held in trust until their 18th birthday (16th in Scotland). If any of them are inheriting a share of the house or if any of the adults are inheriting a share of the house do not already own their own home it would be very unwise not to sell otherwise they lose their first time buyer status and could end up paying a lot more tax when they do buy their own place.

Savvy_Sue

Out of interest, what do you plan to do if you DON'T sell the house? We'll happily explain any other problems you may run into with those plans ... 

pants04

Hi for clarification grand children are 4, 13, 16, 18 ,20 & 20 - based in England.
Property will be sold.

CalvinHobs

Keep_pedalling said:

pants04 said:

All the beneficiaries are either children or grandchildren. 

In which case their will be no IHT to pay, but if the net value of the estate exceeds £650k (or £325k plus any remaining transferable NRB if any of it was used up on the first death)  you will need to do a full IHT return to claim the residential NRB. Do not undervalue the house to avoid this as that is going to lead to a capital gains tax liability.

Are any of the grandchildren minors?

What happens if the house is sold several years later? Say the property was valued at £250K when the person died and is sold 5 years later for £300K. Is CGT due on the £50K increase?

RAS

Yes, unless the beneficiary is resident in the property.

At present there are annual allowances that might reduce the tax but these were due to be nil.

This is why a beneficiary who is not resident but allows one who is resident to "delay" sale because they want to remain in family home can be hit by a double whammy. Even if the estate doesn't attract IHT.

The non-resident foregoes the opportunity to invest/reduce their debts. And when the sale eventually goes ahead, they have to pay CGT whilst the beneficiary who has benefited from the delay isn't liable for the tax.

Keep_pedalling

CalvinHobs said:

Keep_pedalling said:

pants04 said:

All the beneficiaries are either children or grandchildren. 

In which case their will be no IHT to pay, but if the net value of the estate exceeds £650k (or £325k plus any remaining transferable NRB if any of it was used up on the first death)  you will need to do a full IHT return to claim the residential NRB. Do not undervalue the house to avoid this as that is going to lead to a capital gains tax liability.

Are any of the grandchildren minors?

What happens if the house is sold several years later? Say the property was valued at £250K when the person died and is sold 5 years later for £300K. Is CGT due on the £50K increase?

It would be very foolish to leave it that long and yes the estate wound be liable for CGT.

pants04

With regards to the possibility that IHT maybe greater due to the person being pre-deceased by their spouse, is there a time limit on this? Spouse died 37 years ago and relevant person only 1 month ago.

pants04

Probate granted, bills paid, money in the bank, property to sell and ISA to cash in. When can executor start releasing funds to beneficiaries please?