Am I right - or the solicitor...

Grumpy_chap

I am just going to add to my previous post.

There is an Estate with several parts that make the whole.
The whole is subject to IHT.  
The IHT is some percentage of the whole.
It seems inequitable to suggest that the IHT percentage is not proportioned across all the parts of the Estate depending on the respective size of the parts.

mattojgb

I think a net gift is equivalent to net pay, i.e. tax has already been taken care of.

It is normal practice for inheritance tax to be taken from the residuary estate so the residuary beneficiaries bear the cost. Only if there is insufficient in the residuary estate do the specified beneficiaries need to pay.

I would say that the legacy was a specific legacy and the trust came into existence on death. Are the executors also trustees?

DippySkippy

mattojgb said:

I think a net gift is equivalent to net pay, i.e. tax has already been taken care of.

It is normal practice for inheritance tax to be taken from the residuary estate so the residuary beneficiaries bear the cost. Only if there is insufficient in the residuary estate do the specified beneficiaries need to pay.

I would say that the legacy was a specific legacy and the trust came into existence on death. Are the executors also trustees?

Thanks - not what I wanted to hear - I don't understand how "and amount equal to proceeds of sale" is a specific legacy?

Money allegedly went to a couple of accounts, unknown movements of money since sale to death - one account accumulated interest other an NSI income bond paid to a different account. Lloyds after death closed and moved money into one of the accounts. There is not yet defined what the net proceeds of sale even were. To say that these two accounts form a specific legacy makes no sense to me?

Though latest missive from solicitor is that he thinks the money in these accounts are the trust. !!!!!!

The executors are both beneficiaries - one gets life interest in trust the other is remainderman. Both also trustees along with a different solicitor 

DippySkippy

mattojgb said:

I think a net gift is equivalent to net pay, i.e. tax has already been taken care of.

It is normal practice for inheritance tax to be taken from the residuary estate so the residuary beneficiaries bear the cost. Only if there is insufficient in the residuary estate do the specified beneficiaries need to pay.

I would say that the legacy was a specific legacy and the trust came into existence on death. Are the executors also trustees?

Yes IHT is from residuary - states Trust is free of tax.

Thinking some more - even if this is a specific legacy then it is simply same as saying £X in trust - I don't see how it is tied to specific bank accounts. I could see a view that the £X should be moved to trust account - but this hasn't happened and the accounts are all frozen until probate. There is also hope that trust is negotiated away with deed of variance anyway.

Grumpy_chap

DippySkippy said:

amount equal to proceeds of sale

Money allegedly went to a couple of accounts, unknown movements of money since sale to death - one account accumulated interest other an NSI income bond paid to a different account. Lloyds after death closed and moved money into one of the accounts. There is not yet defined what the net proceeds of sale even were. To say that these two accounts form a specific legacy makes no sense to me?

The house was sold and that resulted in an amount of money.  That amount of money is the proceeds of the sale and there will be records of the amount - at worst case verify from Land Registry sale values if there is no local paperwork.

That value of money still exists in the Estate.

However, I don't think it can be extrapolated to the value of a specific account. 
Nor does the "proceeds of the sale" necessarily include interest that may have been accrued between sale and death.
Consider if the account had less money in it because it had been used to pay for the deceased's care home fees.  Would the beneficiary then expect the amount to be made back up to the value from the house sale?
If that would hold true, and the Estate suffers making good the loss, the Estate should also gain from the profit (interest).

That's my opinion.
IANAL.

DippySkippy

Grumpy_chap said:

The house was sold and that resulted in an amount of money.  That amount of money is the proceeds of the sale and there will be records of the amount - at worst case verify from Land Registry sale values if there is no local paperwork.

That value of money still exists in the Estate.

However, I don't think it can be extrapolated to the value of a specific account. 
Nor does the "proceeds of the sale" necessarily include interest that may have been accrued between sale and death.
Consider if the account had less money in it because it had been used to pay for the deceased's care home fees.  Would the beneficiary then expect the amount to be made back up to the value from the house sale?
If that would hold true, and the Estate suffers making good the loss, the Estate should also gain from the profit (interest).

That's my opinion.
IANAL.

The wording is net proceeds of sale - I take this to me is sale price - agents fee - solicitor - EPA rating etc . This can be determined - but I doubt would match monies in the 2 accounts. I expected this figure to be calculated and distributed to dedicated trust account after probate. At this stage other executor doesn't want to budge so will just take the hit and pay from other accounts. Maybe try and claim from loss later 

mattojgb

It might be worth asking the solicitor trustee for their advice. It's not out of the question that the money could be used as you want even if it's part of the trust.

Grumpy_chap

DippySkippy said:

The wording is net proceeds of sale - I take this to me is sale price - agents fee - solicitor - EPA rating etc . This can be determined - but I doubt would match monies in the 2 accounts. I expected this figure to be calculated and distributed to dedicated trust account after probate. 

That is broadly what I would expect.
And it would be that sum as determined (sale price - agent - solicitor etc).  Not that sum as determined plus interest (unless the Will specifically said so).

DippySkippy

Well FYI - solicitor has grudgingly conceded I can use funds to pay IHT from an account he'd previously said was ring fenced for trust. So good news but ridiculous hassle and hold up for no good reason.

Thanks everyone. I can see next argument will be about how much income the trust beneficiary is due. I'm hoping nowt at this stage as no dedicated trust account has been created - not even agreed how money it will start with.