Probate/inheritance tax

Keep_pedalling

You can bay minor beneficiaries without further delay and make interim payments to residual beneficiaries as well providing you hold enough back to cover expenses associated with the house.

madbadrob

Keep_pedalling said:

pants04 said:

Widowed person ....and widowed prior to the purchase of current property.  Property just becomes part of the "estate" expectation is that it will be sold, but does this have to be done immediately before probate/IHT is sorted?

Cash and shares being split 10 ways
Property sale being split 4 ways

IHT needs paying within 6 months of death but it sounds like you have enough liquid assets to cover that. If you do need to submit an IHT return this has to be done first, and you then submit probate 20 working days later.

Out of interest how do they accessd the liquid cash to pay IHT because this wont be released until probate is granted and probate wont be granted until IHT as been paid or HMRC confirm it can be released?  

I am curious as to this because in my line of work this is not something I have to deal with as its usually been done prior to the estates getting to me

Rob

RAS

If there aren't enough cash/liquid assets, then a loan to cover 10% of the IHT bill and rapid sale of illiquid assets is one option.

Keep_pedalling

It is not always nessesary to obtain probate before banks and other financial institutions will release money to the administers. For many banks the money held would need to exceed £50k before probate is required. 

There is also a direct payment scheme where the IHT owed can be paid directly from a financial institution directly to HMRC using form IHT423

https://assets.publishing.service.gov.uk/media/67b7270e32b2aab18314bc79/IHT423_fillable.pdf

Newly_retired

The executor would be well advised to wait until the house is sold and all costs, fees etc are paid. Has the insurance on the house been changed? 

pants04

Does anyone know how investment bonds work on death? How much tax if any needs to be paid on the total value? How long does it take for the cash value to be released?

Keep_pedalling

There are several types of IB and the tax treatment for each is different.

pants04

What are the different types of IB and what is worst case scenario? I don't need in depth ....just trying to get a basic understanding as other beneficiaries are asking and our solicitor is useless!

poseidon1

pants04 said:

What are the different types of IB and what is worst case scenario? I don't need in depth ....just trying to get a basic understanding as other beneficiaries are asking and our solicitor is useless!

Investment bond taxation be it on a deceased estate, held in trust or as it relates to beneficiaries of a estate or trust, transcends ' basic understanding'.

The briefing note below covers the 'basics' , but there will permutations and variations on income tax outcomes depending on if the bond is UK based or offshore; in a trust or not; encashable on death of the policy owner/ life assured or continues beyond the death of the policy owner.

https://techzone.aberdeenadviser.com/public/investment/Taxation-of-bonds

I am not overly surprised the solicitor is out of their depth, general taxation knowledge  is not necessarily their skillset and  investment bond taxation  can be  especially challenging.

Suggests you track down a STEP qualified Chartered Accountant firm with deceased estates experience and investment bond taxation in that context.

In the interim I maybe able to offer some useful pointers given some facts and background,