Inheritance Tax

Iambamboozled

My mother died 13 May 2020 and no valid Will was found. There is a Will, which I believe my ex step father constructed. Consequently me and my three brothers (one of them is the son of my mother and ex step father) are locked in a dispute with my ex step father over my mother's estate. None of us can do probate, neither he with his dodgy Will nor us as next of kin via intestacy rules. We have instead agreed a 50/50 split of the proceeds from the estate, worth about £475,000, with me and a brother as Administrators. Now, as next of kin there is no inheritance tax to pay but my ex step father was not married to our mother so I know different rules apply. He is 92 and has been married to another woman since 1960, with two grown up children. He lived a double life with his 'real' family and ours, each believing they were his only family, for 52 years until my mother died. Just in case it's important, he fiddled the Land Registry by putting our mother's house in his sole name with a dodgy TR1 property transfer. The Land Registry overturned it in September 2023 when it was put back in mother's sole name. When my mother died he resumed living with his wife full time and still lives with her (even though she knows everything now).
How can I find out how much, if any, inheritance tax would be due in relation to his half of the estate?
Many thanks in advance.

poseidon1

If despite the 'dodgy will' your mother died unmarried and intestate then you first consider what nil rate bands she has available.

She has a house so in theory she has £325k + £175k as long as the house is worth £175k or more, so a total of £500k

Under strict intestacy rules you and siblings are your mother's sole heirs and as such no IHT at all on the £475k.

Now you don't want to lose any part of the Residence NiL Rate Band, so the way to structure the 50:50 agreement is for this to take effect after letters administration obtain by the PR, so that this becomes a post probate private agreement between the parties.

Definitely do not give up the 50% share by way of a deed of variation of mother's intestacy,  since that jeopardises part of the RNRB if the house value is the lion's share of her £475k estate - the step father does not meet the criteria for RNRB if his 50% comprises part of the property value.

Keep_pedalling

Providing her house was worth at least £175k then her estate would be exempt from IHT as her administrators can claim her residential NRB taking her exemptions to £500k. You will however have to file a full IHT return to claim this.

Was this dodgy will actually valid? Had she signed it and has her signature witnessed by 2 witnesses? 

Iambamboozled

Keep_pedalling said:

Providing her house was worth at least £175k then her estate would be exempt from IHT as her administrators can claim her residential NRB taking her exemptions to £500k. You will however have to file a full IHT return to claim this.

Was this dodgy will actually valid? Had she signed it and has her signature witnessed by 2 witnesses? 

Thank you for taking the time to reply. I was pretty sure me and my siblings half would be exempt but I wasn't sure if my ex step father's would be. The property is the full value of the estate, my ex step father's other family have taken just about everything else.

The "Will" has more holes than a string vest.

Iambamboozled

poseidon1 said:

If despite the 'dodgy will' your mother died unmarried and intestate then you first consider what nil rate bands she has available.

She has a house so in theory she has £325k + £175k as long as the house is worth £175k or more, so a total of £500k

Under strict intestacy rules you and siblings are your mother's sole heirs and as such no IHT at all on the £475k.

Now you don't want to lose any part of the Residence NiL Rate Band, so the way to structure the 50:50 agreement is for this to take effect after letters administration obtain by the PR, so that this becomes a post probate private agreement between the parties.

Definitely do not give up the 50% share by way of a deed of variation of mother's intestacy,  since that jeopardises part of the RNRB if the house value is the lion's share of her £475k estate - the step father does not meet the criteria for RNRB if his 50% comprises part of the property value.

This is extremely helpful and makes a lot of sense to me. The estate comprises of the property only (there's another long and sad tale regarding the belongings). Does that change anything you said? Regarding the rest of your reply, I will be getting in touch with our solicitor about it. Thank you.

Keep_pedalling

Iambamboozled said:

Keep_pedalling said:

Providing her house was worth at least £175k then her estate would be exempt from IHT as her administrators can claim her residential NRB taking her exemptions to £500k. You will however have to file a full IHT return to claim this.

Was this dodgy will actually valid? Had she signed it and has her signature witnessed by 2 witnesses? 

Thank you for taking the time to reply. I was pretty sure me and my siblings half would be exempt but I wasn't sure if my ex step father's would be. The property is the full value of the estate, my ex step father's other family have taken just about everything else.

The "Will" has more holes than a string vest.

Have you taken paid for legal advice? If the will is invalid then her estate is intestate and the scoundrel is entitled to nothing and you need to apply for letters of administration. 

If the will is being used to apply for probate, and he is the executor it is too late to do a deed of variation and nothing to stop him distributing it as per the will.

Keep_pedalling

poseidon1 said:

If despite the 'dodgy will' your mother died unmarried and intestate then you first consider what nil rate bands she has available.

She has a house so in theory she has £325k + £175k as long as the house is worth £175k or more, so a total of £500k

Under strict intestacy rules you and siblings are your mother's sole heirs and as such no IHT at all on the £475k.

Now you don't want to lose any part of the Residence NiL Rate Band, so the way to structure the 50:50 agreement is for this to take effect after letters administration obtain by the PR, so that this becomes a post probate private agreement be

Definitely do not give up the 50% share by way of a deed of variation of mother's intestacy,  since that jeopardises part of the RNRB if the house value is the lion's share of her £475k estate - the step father does not meet the criteria for RNRB if his 50% comprises part of the property value.

As she died 5 years ago a deed of variation is not possible.

poseidon1

Keep_pedalling said:

poseidon1 said:

If despite the 'dodgy will' your mother died unmarried and intestate then you first consider what nil rate bands she has available.

She has a house so in theory she has £325k + £175k as long as the house is worth £175k or more, so a total of £500k

Under strict intestacy rules you and siblings are your mother's sole heirs and as such no IHT at all on the £475k.

Now you don't want to lose any part of the Residence NiL Rate Band, so the way to structure the 50:50 agreement is for this to take effect after letters administration obtain by the PR, so that this becomes a post probate private agreement be

Definitely do not give up the 50% share by way of a deed of variation of mother's intestacy,  since that jeopardises part of the RNRB if the house value is the lion's share of her £475k estate - the step father does not meet the criteria for RNRB if his 50% comprises part of the property value.

As she died 5 years ago a deed of variation is not possible.

Well spotted! 

Therefore no question with regard to inadvertently losing the RNRB via a DOV. Only issue is whether she legally  died intestate or not, which should be a question of fact rather than interpretation.

Iambamboozled

Keep_pedalling said:

Iambamboozled said:

Keep_pedalling said:

Providing her house was worth at least £175k then her estate would be exempt from IHT as her administrators can claim her residential NRB taking her exemptions to £500k. You will however have to file a full IHT return to claim this.

Was this dodgy will actually valid? Had she signed it and has her signature witnessed by 2 witnesses? 

Thank you for taking the time to reply. I was pretty sure me and my siblings half would be exempt but I wasn't sure if my ex step father's would be. The property is the full value of the estate, my ex step father's other family have taken just about everything else.

The "Will" has more holes than a string vest.

Have you taken paid for legal advice? If the will is invalid then her estate is intestate and the scoundrel is entitled to nothing and you need to apply for letters of administration. 

If the will is being used to apply for probate, and he is the executor it is too late to do a deed of variation and nothing to stop him distributing it as per the will.

Many thousands so far. As I say we have been at stalemate - neither party can apply for probate - and that is why we have agreed a 50/50 split. He is entitled to nothing but if it went to court it would drag on even longer and would not be sensible for either party. We're not happy he is getting anything but sometimes you have to compromise and suck it up.

Keep_pedalling

Iambamboozled said:

Keep_pedalling said:

Iambamboozled said:

Keep_pedalling said:

Providing her house was worth at least £175k then her estate would be exempt from IHT as her administrators can claim her residential NRB taking her exemptions to £500k. You will however have to file a full IHT return to claim this.

Was this dodgy will actually valid? Had she signed it and has her signature witnessed by 2 witnesses? 

Thank you for taking the time to reply. I was pretty sure me and my siblings half would be exempt but I wasn't sure if my ex step father's would be. The property is the full value of the estate, my ex step father's other family have taken just about everything else.

The "Will" has more holes than a string vest.

Have you taken paid for legal advice? If the will is invalid then her estate is intestate and the scoundrel is entitled to nothing and you need to apply for letters of administration. 

If the will is being used to apply for probate, and he is the executor it is too late to do a deed of variation and nothing to stop him distributing it as per the will.

Many thousands so far. As I say we have been at stalemate - neither party can apply for probate - and that is why we have agreed a 50/50 split. He is entitled to nothing but if it went to court it would drag on even longer and would not be sensible for either party. We're not happy he is getting anything but sometimes you have to compromise and suck it up.

Surely the will is either valid or it is not, I can’t see how this can be in dispute. 

Iambamboozled

Keep_pedalling said:

poseidon1 said:

If despite the 'dodgy will' your mother died unmarried and intestate then you first consider what nil rate bands she has available.

She has a house so in theory she has £325k + £175k as long as the house is worth £175k or more, so a total of £500k

Under strict intestacy rules you and siblings are your mother's sole heirs and as such no IHT at all on the £475k.

Now you don't want to lose any part of the Residence NiL Rate Band, so the way to structure the 50:50 agreement is for this to take effect after letters administration obtain by the PR, so that this becomes a post probate private agreement be

Definitely do not give up the 50% share by way of a deed of variation of mother's intestacy,  since that jeopardises part of the RNRB if the house value is the lion's share of her £475k estate - the step father does not meet the criteria for RNRB if his 50% comprises part of the property value.

As she died 5 years ago a deed of variation is not possible.

It's not five years until 13th May this year. Nevertheless it looks as if a post probate agreement is the way forward. I told our solicitor that because we reject the will absolutely, we want no acknowledgement of it in the agreement. I need to check that it is not a deed of variation. It's with a barrister at the moment.