Questions on inheritance tax.

Dollarbroke

Hi all, my mother passed away at the end of September this year. The property was placed in a trust back in 2007 and the trust is in the names of us 4 children, two of us are the executors. 

The property is worth around £400k

I’m trying to fill in the inheritance tax ‘on-line calculator’ on the gov uk website, just to get a rough idea on whether tax is payable.  I’m not sure on the answers to two questions

1st question: What was the total value of all property owned in the UK?

2nd question: What was the value of assets held in trust that they were able to benefit from?

As the whole property was in a trust, how would I answer these two questions.

Thank you.

Keep_pedalling

A bit more info required. What is the value of her other assets? Was she a widow? If she was a widow did she inherit all of her husband’s estate.

Unfortunately putting her home into a trust is likely to be a costly mistake. For IHT purposes the house still forms part of her estate but the residential NRB is not available because she handed over legal ownership to a trust before the RNRB was introduced, so unless there is a transferable NRB available IHT will be due. On top of that the trust is going to to have a CGT liability on the gain in value since it was set up. 

Dollarbroke

She was a widow and did inherit her husbands half of the estate (home), he died in 2020. It was advice she got from a company back in 2007.
My mum was removed from the trust last year so the trust is in our (children's) names now.
Other assists around £100k

Keep_pedalling

Dollarbroke said:

She was a widow and did inherit her husbands half of the estate (home), he died in 2020. It was advice she got from a company back in 2007.
My mum was removed from the trust last year so the trust is in our (children's) names now.
Other assists around £100k

Unfortunately the companies who sold these were in it for fees, there are no actual benefits for the home owner but undoubtedly it was sold on the fear of having to pay care fees.

Fortunately there will be no IHT to pay as your mother’s estate has the transferable NRB to claim but you still need to do a full IHT return because she maintained beneficial interest by continuing to live in the house after putting it in trust.

The answer to your first question is £0 as she no longer held legal ownership of her home.

The answer to the second question will be £400k and you will need to complete supplementary form IHT418.

I would recommend taking professional advice about winding up the trust and any tax that might be due on disposal of the property.

Dollarbroke

Thank you, that's very helpful. I will consider professional advice as it's beyond me.