Inheritance Tax Checker (ITC) before Probate Application

vanessahw

Hi all
I am trying to complete the ITC prior to applying for Probate for my late father.
I have a list of all his assets - all of which have been left to my Mother save for my Fathers share of the marital property which he left to my brother and myself.
My Father had a private pension pot to drawn down a monthly pension - this has been left to my Mother.
However, I am not sure in which section on the ITC to put this - I don't think it is 
Money in a bank, cash ISA, or cash in the home (as asked in Q4)
Nor household, personal items and motor vehicles  (as asked in Q5)
Nor UK stocks and shares ( as asked in Q6).  
Q7 asks the value of assets held in trust that they were able to benefit from - does this include pensions or not - if not then,
Q9 asks the value of other assets they owned - does this include the pension
Or is the pension covered in Q4 or Q6 and needs to be added to those totals 
TIA for any respinses 

RAS

Where is it intended that your mother live if the house has been left to you and your brother? 

If she is granted the right to live there until her death, remarriage, sale of the property etc, this is likely to be an Immediate Post Death Interest trust.

In which case there is no IHT to pay, it prevents you and your brother from incurring CGT liabilities on sale and secures your father's portion of the house for you both if your mother remarries. And ensures you can use your father's residential IHT allowance when your mother dies, if required.

The trust needs registering with HMRC promptly and they issue fines if it's not done. 

So can you quote exactly what the clause in your father's will says, redacting names, so people can advise you?

Keep_pedalling

The pension almost certainly falls outside of his estate.

As the above post if your mother has been left a life interest in his share of the home it is still covered by spousal exemption which means the entire estate is an exempt one. If you and your sibling have been left his share of the house absolutely than I would seriously consider a deed of variation to correct that as it is not the most tax effective way to do it, and am immediate post death interest trust gives your mother more security as well.

vanessahw

RAS said:

Where is it intended that your mother live if the house has been left to you and your brother? 

If she is granted the right to live there until her death, remarriage, sale of the property etc, this is likely to be an Immediate Post Death Interest trust.

In which case there is no IHT to pay, it prevents you and your brother from incurring CGT liabilities on sale and secures your father's portion of the house for you both if your mother remarries. And ensures you can use your father's residential IHT allowance when your mother dies, if required.

The trust needs registering with HMRC promptly and they issue fines if it's not done. 

So can you quote exactly what the clause in your father's will says, redacting names, so people can advise you?

RAS my Fathers share of the property has been left equally to my brother and myself as Tenants in Common and Mum is to remain in the family home whilst ever she is able to.  My Mother owns half of the property. 
My query is about Dads pension and where to put this on the IHT - I have worked out where everything else goes - its just the pension. 
Thanks 

vanessahw

Keep_pedalling said:The pension almost certainly falls outside of his estate.As the above post if your mother has been left a life interest in his share of the home it is still covered by spousal exemption which means the entire estate is an exempt one. If you and your sibling have been left his share of the house absolutely than I would seriously consider a deed of variation to correct that as it is not the most tax effective way to do it, and am immediate post death interest trust gives your mother more security as well.

Keep_pedalling - My understanding is that I still need to complete the IHT  - so just need to know which section to declare the pension in. I understand that the estate will be free of IT as it was all left to a spouse other than dads share of the marital home. However, I cannot apply for probate without the IHT being completed and a code being received, - unless I am misunderstanding this? 

RAS

vanessahw said:

RAS said:

Where is it intended that your mother live if the house has been left to you and your brother? 

If she is granted the right to live there until her death, remarriage, sale of the property etc, this is likely to be an Immediate Post Death Interest trust.

In which case there is no IHT to pay, it prevents you and your brother from incurring CGT liabilities on sale and secures your father's portion of the house for you both if your mother remarries. And ensures you can use your father's residential IHT allowance when your mother dies, if required.

The trust needs registering with HMRC promptly and they issue fines if it's not done. 

So can you quote exactly what the clause in your father's will says, redacting names, so people can advise you?

RAS my Fathers share of the property has been left equally to my brother and myself as Tenants in Common and Mum is to remain in the family home whilst ever she is able to.  My Mother owns half of the property. 
My query is about Dads pension and where to put this on the IHT - I have worked out where everything else goes - its just the pension. 
Thanks 

Quote" This sounds very much like an IPDI trust. Please quote the exact wording".

May not be the question you asked, but if it is an IPDI trust, rather than you and brother being "left shares equally", then the trust needs registering with the HMRC or they will fine you.

If you have been "left shares equally", you and bro will be unnecessarily accruing CGT liabilities and there are all sorts of risks regarding benefits, insolvency and relationship breakdown.

Just checking you do know there is no IHT to pay on anything left to the spouse?

Keep_pedalling

I agree with RAS, any will drawn up by a competent solicitor would do it this way as it is both the most tax efficient way of doing it as it avoids a later potential CGT and additional SDLT  liability and provides a greater level of security for your mother. If the will contains the term tenants in common however then I would be suspicious of the competency of the drafter. 

Can you give us the exact wording of the clause about the house with personal info rejected please?

Sorry you think we are going off at a tangent, but we are trying to help you avoid making what could be a costly mistake and submitting what could be an incorrect IHT return that probably does not submitting anyway. Even if the will does not create a IPDI trust the house would need to be worth more than £650k before an IHT return would be needed.

As to your question about his pension is highly unlikely to fall within his estate the vast majority of pensions don’t.