IHT and Joint Tenant Property

Jesus_take_the_wheel

I would be grateful for any clarity on the following. Thank you in advance.

A house has been owned by mother and daughter as joint tenants (meaning each owns 100%) for well over 7 years.  The mother has passed away meaning that the daughter automatically becomes the sole owner via survivorship. However, for the purpose of IHT, the house has been valued and that value has been halved to contribute towards the deceased estate value.  The half value is £115,834 (The average of valuations provided by 3 estate agents and halved). I would be grateful if the following queries could be clarified. Thank you for your time.

1)      The IHT guidance seems to suggest that I deduct a further 10% from the deceased half (I believe this would be £11, 583) making a house value to contribute towards the deceased estate of £104, 251. I don’t expect you to check my calculations. I just hope to be advised on whether I am correct to deduct this further 10%. Thank you.

2)      Two solicitors, who are aware of the joint tenancy, have informally advised that £500,000 can be inherited before IHT is expected. I believe that they must be adding the nil rate band of £325,000 and the RNRB of £175,000. However, on using the calculator provided by HMRC, it says that only £100,000 of the RNRB’s £175,000, can be used. Is this because the mother’s ‘half’ is less than £175,000? If so, does this mean that the amount not liable to IHT will be £425,000 rather than the £500,000 that the solicitor’s suggest or might I be missing something? Thank you.

3)      In using the calculator mentioned in point 2 above, I am asked ‘Did the residence pass to a direct descendant’ with options to tick;

Yes, all of it passed

Yes, some of it passed

 As joint tenants, I was unsure whether to tick the option of ‘some of it’ as the daughter already owned it, but for the purpose of IHT it has been halved, or, ‘all of it’ because all of the house is owned by (passes to) a direct descendant.

 4)      As joint tenants, I believe that the house contents are also valued as joint tenants (half mother, half daughter).  If this is correct, will these automatically be inherited by the daughter as the house itself is even though the value will need to contribute to the deceased estate for IHT purposes, or, will these need to be valued for other beneficiaries (There is no Will)?

 5)      If the house contents are not automatically owned by the daughter, are you able to explain how they will be distributed to the other beneficiaries. For example, the daughter bought an inexpensive, charity shop, sofa to be used in the house about 9 months before her mother passed. Will the value be halved and then what will be considered the mother’s half, shared between the other beneficiaries?

 6)      On reading the HMRC guidance, it seems to say that the fee for probate cannot be deducted from the value of the deceased’s estate. On reading an online solicitor’s page, it suggests that it can. I am wondering whether this discrepancy might be explained by the following:

 The probate fee cannot be deducted from the value of the estate before calculating it for IHT, but when the estate is ready to be distributed between the beneficiaries, it can be deducted.

 Thank you so much for your time. I want to make sure that I am doing this correctly as I really don’t want HMRC or probate to query anything. I am tired and grieving. Thank you.

 

 

 

Keep_pedalling

If the daughter lived with her mother then the household items would usually be classed as joint assets. For IHT purposes lumping all the household goods for a nominal sum will suffice. 

What was the marital status of the deceased? Ignore minor stuff like household items what is the total value of her estate?