Hope to Check IHT

MayDogsandCoffee

Hi, hope that someone could help on my query.  We are trying to be MSE after solicitor quoted £6k for probate, so DIY route.  My Mother has died and we have confirmed savings of £183,222.  (without any recent interest so could go up but would not assume to go over £200k) a bank a/c holding £11K (I KNOW!!!)  and a house with value of £240,000 (approx).  Are we over the threshold for IHT?  I have been trying to read the rules but managed to confuse myself.  I understand that IHT is taken off the total before distribution of outstanding monies go to two children?  There is also £10K earmarked for Grandchild.   

DancingBadger

The IHT allowance is currently £325,000; therefore £109,222 is exposed to IHT at the rate of 40% - a liability of £43,688.80, not taking account of funeral costs and other deductible expenses.

However, if the house has been left to a direct descendent (children or grandchildren) there is an additional allowance of £175,000, which would take the estate comfortably out of IHT territory.

p00hsticks

I'm sorry for your loss. 

Was she married ? 
If so, did her spouse die before her and leave everything to her ? 
If so,  then she'd inherit his Nil Rate Band  as well so £650k before you'd need to think about the extra Property allowance. This would save some paperwork, as I think you have to fill in a complete IHT return if you are claiming the property allowance, but it's just a box tick to say that there is an inherited NRB. 

MayDogsandCoffee

DancingBadger said:

The IHT allowance is currently £325,000; therefore £109,222 is exposed to IHT at the rate of 40% - a liability of £43,688.80, not taking account of funeral costs and other deductible expenses.

However, if the house has been left to a direct descendent (children or grandchildren) there is an additional allowance of £175,000, which would take the estate comfortably out of IHT territory.

Thanks.  Everything was just split between me and sibling with exception of Grandchild £10K, I plan to move into house and sell mine to buy out sibling - so if it was left to us we are not liable for IHT?  Funeral was pre-paid and I don't think there will be many deductibles due to me moving in.  

RAS

Was mum single, married, widowed or divorced, as her status affects the value of the IHT nil allowance?

Keep_pedalling

There will be no IHT. If she was a widow you can also claim the transferable NRB from her husband’s estate assuming she inherited the bulk of his estate.

If she was now a widow then you will need to claim her residential NRB but although no IHT will be payable you will need to do a full IHT return to claim this.

JGB1955

Keep_pedalling said:

There will be no IHT. If she was a widow you can also claim the transferable NRB from her husband’s estate assuming she inherited the bulk of his estate.

If she was now a widow then you will need to claim her residential NRB but although no IHT will be payable you will need to do a full IHT return to claim this.

I suspect this should read 'NOT'.

MayDogsandCoffee

Thank you, she was widowed in 2010 so knowing about NRB is helpful.

RAS

OK, so just use hubbie's non-residential IHT allowance and no IHT forms are needed.

poseidon1

MayDogsandCoffee said:

Thank you, she was widowed in 2010 so knowing about NRB is helpful.

For clarity, since your father died pre 2017 ( when the residence nil rate band was introduced), you would be limited to £100k transferable from him ( this infor maybe of more use to others reading this thread).

 However on the size of your mother's gross estate I would agree DancingBadger's assessment that your mother's £500k in personal NRBs should more that suffice to avoid IHT without having recourse to your father's NRBs.

Keep_pedalling

poseidon1 said:

MayDogsandCoffee said:

Thank you, she was widowed in 2010 so knowing about NRB is helpful.

For clarity, since your father died pre 2017 ( when the residence nil rate band was introduced), you would be limited to £100k transferable from him ( this infor maybe of more use to others reading this thread).

 However on the size of your mother's gross estate I would agree DancingBadger's assessment that your mother's £500k in personal NRBs should more that suffice to avoid IHT without having recourse to your father's NRBs.

But that would require a full IHT return, using the available transferable NRB will be the simpler option.