IHT calculation

Kittyrules

So my partner said that liabilities such as care home bills and money owed on a property are reduced from how much the estate is worth before IHT is calculated? 

I thought IHT was calculated of all the estate has, then taxed and then when probate is issued you have to pay what is owed? 

Thank you 

Grumpy_chap

IHT is calculated on the nett value of the Estate.

Have you received a statement of assets and liabilities from the Guardian yet?

p00hsticks

You may be confusing two different aspects here. 

It's possible that an executor isn't actually in a position to settle debts such as care home fees, outstanding mortgages on properties until after probate is obtained, because it is probate that gives them the authority to sell property, access savings accounts etc (although some banks may release money up to a certain amount without the need for probate).

But those debts that have accrued up to the point of death will still be included in the calculations for IHT and probate as deducted from any assets, even though they are still outstanding at the time. 

Keep_pedalling

IHT needs to be paid within 6 moths of death whether you have obtained probate or not, and is paid on the net value of the estate.

Net value for IHT = Assets at date of death + non exempt gifts given in the 7 years prior to death - debts - funeral costs.