Advice regarding distribution of the estate

TatamiSandwich

Thank you for taking the time to click on this.

My father passed away a little over a year ago. He had just shy of £30k in his bank accounts. There is no property or larger material assets.

After speaking to the banks we were told that they could transfer the money and it didn't need probate.

The money was transferred to my brother (Called 'Brother 1' from now) who put it in a savings account separate from any other money.

Since then we have confirmed with HMRC and the DWP that there is no additional money owed. There were a few minor claims from Telecoms and Energy companies which have been paid and settled.

We received a few letters from a debt collection company about some debts that total about £10k. Further investigation gave us reason to believe that all of these debts were statue barred long before his death.

In Feburary this year we realised we needed to post in the London Gazette which we did, they also posted in the local paper. We were told that there was a 2 month window for any creditors to put forward a claim.

During this time, we (Specifically my other brother, 'Brother 2') have spoken to the creditors who sent the letters and we have received an email from them which states clearly that most of the debts are Closed, and the 2 that aren't were indeed Statute barred long ago. This email was shared with Brother 1.

The Gazette claims period ended yesterday and it seems that there were no claims. We are looking to get an email to confirm this from the Gazette.

In my mind, Brother 1 is now clear to distribute the estate, and should do in a timely fashion? He has said he will hold a little back as he must pay taxes on the interest earned while it's been in a savings account.

Thank you for having read through. Any advice would be gratefully recieved.

poseidon1

If bank interest exceeded £500 for 2024/25  tax year, there will indeed be a 20% estate income tax due thereon - see below explanatory HMRC link 

https://www.gov.uk/probate-estate/reporting-the-estate

Your respective 1/3rd shares of this after taxed estate income will also be reportable by each of you for your own personal tax purposes. See below link to form R185 ( Estate income), brother 1 will need to prepare for each of you -

https://www.gov.uk/government/publications/trusts-and-estates-statement-of-income-from-estates-r185-estate-income

madbadrob

YOu dont need anything from the gazette.  A date is placed on the advert to which all conatct must be made by that is sufficient proof.  Just remember the posting doesnt cover you from having to repay the debt it just covers the administrator if not a beneficiary from being chased.  

With the value you mentioned being around 30k I wouldnt be worried about tax implication 30k will not give 500 pounds of interest in a financial year.

My understanding regarding personal tax is that if IHT is not payable then there is no personal tax to pay of your share of the estate.  Looking at the link Poseidon posted this is for the R185 form which a beneficiary would be given to show that interest of over £500 as been taxed and allows you to claim it back if in that tax year you do not use all of your personal allowance

Rob

Notepad_Phil

madbadrob said:

...
With the value you mentioned being around 30k I wouldnt be worried about tax implication 30k will not give 500 pounds of interest in a financial year.
...

Maybe £30k in an interest bearing account wouldn't have usually paid much out when rates were ultra low, but over the last few years that's certainly not a certainty anymore and in just a 2% account that would pay £600 interest per year, so definitely something to check.

poseidon1

madbadrob said:

YOu dont need anything from the gazette.  A date is placed on the advert to which all conatct must be made by that is sufficient proof.  Just remember the posting doesnt cover you from having to repay the debt it just covers the administrator if not a beneficiary from being chased.  

With the value you mentioned being around 30k I wouldnt be worried about tax implication 30k will not give 500 pounds of interest in a financial year.

My understanding regarding personal tax is that if IHT is not payable then there is no personal tax to pay of your share of the estate.  Looking at the link Poseidon posted this is for the R185 form which a beneficiary would be given to show that interest of over £500 as been taxed and allows you to claim it back if in that tax year you do not use all of your personal allowance

Rob

£30,000 at a modest 4% over the last year would comfortably yield £1,200, even a poor 3% would be £900. All depends when the savings account was actually opened as to whether the £500 de minimis may have been breached.

madbadrob

poseidon1 said:

madbadrob said:

YOu dont need anything from the gazette.  A date is placed on the advert to which all conatct must be made by that is sufficient proof.  Just remember the posting doesnt cover you from having to repay the debt it just covers the administrator if not a beneficiary from being chased.  

With the value you mentioned being around 30k I wouldnt be worried about tax implication 30k will not give 500 pounds of interest in a financial year.

My understanding regarding personal tax is that if IHT is not payable then there is no personal tax to pay of your share of the estate.  Looking at the link Poseidon posted this is for the R185 form which a beneficiary would be given to show that interest of over £500 as been taxed and allows you to claim it back if in that tax year you do not use all of your personal allowance

Rob

£30,000 at a modest 4% over the last year would comfortably yield £1,200, even a poor 3% would be £900. All depends when the savings account was actually opened as to whether the £500 de minimis may have been breached.

I hasnt realised that savings rates were that high. I knew mortgage rates were in that brcket and assumed as in previous years that the savings rates was at least 2 percentage points lower.  Thanks for correcting me

Rob

poseidon1

madbadrob said:

poseidon1 said:

madbadrob said:

YOu dont need anything from the gazette.  A date is placed on the advert to which all conatct must be made by that is sufficient proof.  Just remember the posting doesnt cover you from having to repay the debt it just covers the administrator if not a beneficiary from being chased.  

With the value you mentioned being around 30k I wouldnt be worried about tax implication 30k will not give 500 pounds of interest in a financial year.

My understanding regarding personal tax is that if IHT is not payable then there is no personal tax to pay of your share of the estate.  Looking at the link Poseidon posted this is for the R185 form which a beneficiary would be given to show that interest of over £500 as been taxed and allows you to claim it back if in that tax year you do not use all of your personal allowance

Rob

£30,000 at a modest 4% over the last year would comfortably yield £1,200, even a poor 3% would be £900. All depends when the savings account was actually opened as to whether the £500 de minimis may have been breached.

I hasnt realised that savings rates were that high. I knew mortgage rates were in that brcket and assumed as in previous years that the savings rates was at least 2 percentage points lower.  Thanks for correcting me

Rob

I got a fix rate on a cash  ISA of  5.8% ( matured September 2024), so yes 2024 was a bit of a bumper year for canny savers.

Appreciably less now, but I am  still averaging around 4.4% across a mix of fixed and instant access products, so still some real returns to be had over and above the  current rate of inflation.