Befuddlement on probate value

gsi

IHT 400 has been submitted and have received back from HMRC the unique code and gross and net probate values to include on application for probate. But not sure if probate values provided by HMRC are correct.

I understand you'd normally deduct value of jointly owned assets (banks and household goods) from net IHT value to get net probate value (as jointly owned assets are inherited directly by spouse so have spouse exemption). And that is what they've done. However, the net IHT value didn't include the value of the joint assets in the first place as spouse exemption was claimed for all of them on IHT404 box 9, meaning that the value of the joint assets became zero in IHT404 box 10, which is then copied over to IHT400 box 50 and so is not included in any totals on that form. So......when it comes to the probate value, why would the joint asset value be deducted when this value wasn't in the total in the first place?

Were the IHT forms completed correctly (hopefully as claiming the spouse exemption on IHT404 had been previously discussed with the IHT helpline) or has there been an error in determining the probate value? 

And, if it turns out that the probate value is less than it should have been (by a few thousand) would that cause any future problems when distributing the estate? Unless there is a system somewhere tracking how much is distributed (which I don't believe exists but could be wrong) then I can't see it would make any practical difference anyway?

I guess the key question is whether the IHT404 and IHT400 forms were completed correctly so that joint bank accts/household goods were reported on IHT404 but zero value of this was included on IHT400 because of claiming all as spouse exemption as it appears to tell you to do. If the probate values subsequently provided to me are wrong, then I think any blame for that would lie elsewhere but don't know if it would throw up problems further down the line.

Any help with this befuddlement gratefully received!

AP3

Am I reading it correctly that this is a spousal probate? i.e. are all assets transferring to the living spouse?

If so it would be an exempt excepted estate, and no IHT forms required.

If not, it's important to remember that jointly owned assets are halved for IHT purposes, as only half the asset was owned by the deceased.

Have you tried the IHT calculator here: https://www.gov.uk/valuing-estate-of-someone-who-died/estimate-estate-value ?

(I'm not an expert, but I just applied for probate with help from this forum)

Keep_pedalling

It does sound like you made an error with the IHT return.

What was the gross value of his estate for IHT purposes? How much of his estate was not left to his wife?

gsi

Estate value up to nil rate band and residence nil rate band are to be inherited by non-spouse beneficiaries. Anything over that (which otherwise would have been subject to IHT) being inherited by spouse. Net effect is no IHT to pay on this estate. 
The HMRC criteria dictated that this was not an excepted estate and that IHT400 was required even though no IHT payable because, as HMRC told me, they "still want to know about the assets" (for future informational activities I think).
Aware that joint assets are halved in value, that has been done.

Keep_pedalling

gsi said:

Estate value up to nil rate band and residence nil rate band are to be inherited by non-spouse beneficiaries. Anything over that (which otherwise would have been subject to IHT) being inherited by spouse. Net effect is no IHT to pay on this estate. 
The HMRC criteria dictated that this was not an excepted estate and that IHT400 was required even though no IHT payable because, as HMRC told me, they "still want to know about the assets" (for future informational activities I think).
Aware that joint assets are halved in value, that has been done.

The residencial NRB is the issue here. Does the will allow spouse to be allowed to carry on living there? If it does then it has created an immediate post death intestacy trust which is still covered by spousal exemption and does not use his RNRB. 

gsi

House was owned tenants in common with up to the residence nil rate band amount going to descendant and remainder to spouse. No IHT on this as residence nil rate band is not taxable and spouse exemption covers rest. But the amount in the original query refers only to bank accounts/household goods that were owned jointly, not the house.

Keep_pedalling

gsi said:

House was owned tenants in common with up to the residence nil rate band amount going to descendant and remainder to spouse. No IHT on this as residence nil rate band is not taxable and spouse exemption covers rest. But the amount in the original query refers only to bank accounts/household goods that were owned jointly, not the house.

The big question is does the will give her the right to remain in the property? Making use of the RNRB on the death of the first spouse is something that is normally not done as it is not tax efficient as far as CGT and possible SDLT if any of the beneficiaries are not home owners. There are no IHT benefits either.