Will / trust

RAS

There is no CGT at this stage. 

The only way that becomes an issue is if one of the assets gains value between probate and realisation. So stocks and shares which gain value, or you list the house for probate at a much lower price than it sells for eventually. So getting an accurate estimate of the house value is crucial. 

Skint_yet_Again

Sorry I understood that there would be CGT on the half of the property that has been in mums trust from 2018 probate value to date trust ended at dad’s death? 

poseidon1

Skint_yet_Again said:

Thanks @poseidon1 and @RAS as soon as I have some figures I will come back. Estate agents booked for valuation (under £200k would expect £160-£180k total including trust share) savings £150k ish waiting for statements/ ISAS, contents no real collectables have been checking eBay nothing over £100 ish. Car = just about to get quotes from auto trader/ we buy ani car & motor way. (7,000 ish). Do expenses for solicitors/ tax come off to reach the total figure or is it gross amount? 

RAS sorry I missed your post earlier. Yes we missed the change in 2022 requiring us to register the trust. We were expecting to pay CGT as house has increased a lot due to house market going up since 2018 when mums trust was created. 

A very modest estate totalling around £350k -£360k including car?

On this basis and notwithstanding the termination of your father's trust on death, I believe the estate qualifies as an excepted estate for probate purposes - see HMRC guidance below -

https://www.gov.uk/valuing-estate-of-someone-who-died/check-type-of-estate

The terminated trust is well under the £250k threshold ( only £90k at the top end of 50% of  the house value), whilst personal assets, chattels and the other 50% of the house comes in at around £270k.

At most only your mother' s transferable NRB of £325k is required here together with your father's NRB, so you can ignore the residence nil rate bands for both your mother and father entirely.

Suggest once you have your finalised and compiled all the  numbers  for estate assets and liabilties, follow the link for excepted estate reporting in the HMRC guidance above , and you should find you can apply for probate yourselves without professional assistance. 

As for overlooking registration of your father's trust created by your mother, suggest you write to HMRC in the 1st instance, setting out the events  and mitigation you have explained here, and ask if there is much point registering a trust which has since terminated without ever giving rise to any trustee tax liabilties during its exsistence.

Hopefully HMRC's trust inspectorate will be of the view they have more important things to concern themselves than a now defunct trust.

Overall it would be ashame incurring professional fees for such a modest estate, not withstanding the slight complication with the trust.

RAS

Skint, do the probate application on line, much less likely to be stopped and much quicker.

If dad was in receipt of any means tested benefits, then be aware that it can take them 9 months or more to wake up.

Typically, when they see the value they get nervous about excess savings, when it's actually house value.

Skint_yet_Again

Thank you both so much for your patience and support. I got it totally wrong thinking the trust paid CGT on increase in value between mums death in 2018 and 2025 when dad died and thought we just included half the current house value in dads estate. To be fair we didn’t really look into what happened when the trust ended. 🤯 Much reading needed to understand all you have advised and I may be back with more questions later. Not sure how much NRB was unused after mum passed. Will dig out copy of her probate form. 

Thankfully dad didn’t get any means tested benefits but we have done tell us once so not sure how long dwp/tax take to reply. He will probably be a little overpaid on state pension & attendance allowance because he was only diagnosed 3 weeks before he passed. Maybe a small tax refund using rest of this years tax allowance. 

Thanks again 

Dandylion

These links might provide reassurance re potential penalties for failing to register a trust in these circumstances. 

LITRG:
‘HMRC’s guidance says a penalty will not be charged for the first ‘failure to register’ or the first ‘failure to keep the register up to date’ offence, so long as the failure was not deliberate’
https://www.litrg.org.uk/tax-nic/trusts-and-estates/trust-registration-service

Here is what HMRC say:

https://www.gov.uk/hmrc-internal-manuals/trust-registration-service-manual/trsm80020

poseidon1

Dandylion said:

These links might provide reassurance re potential penalties for failing to register a trust in these circumstances. 

LITRG:
‘HMRC’s guidance says a penalty will not be charged for the first ‘failure to register’ or the first ‘failure to keep the register up to date’ offence, so long as the failure was not deliberate’
https://www.litrg.org.uk/tax-nic/trusts-and-estates/trust-registration-service

Here is what HMRC say:

https://www.gov.uk/hmrc-internal-manuals/trust-registration-service-manual/trsm80020

Very helpful, and probably applies to most overlooked registrations which regularly arise on this forum.

Skint_yet_Again

Thank you @Dandylion very helpful. I have started to write a letter to HMRC as suggested by @poseidon1 and used some of the guidance online to tailor my “reasonable excuse” outlining how dad did his best and took reasonable care to fulfil his obligations and was not aware the rules around registration had changed. Plus the part about is it necessary to now register a trust which has since terminated without ever giving rise to any trustee tax liabilities during its existence? Will let you know how I get on. 

Have spent today putting car for sale we went for best quote & have put online for sale with motor way. If anyone is interested will let you know how we get on. Just needed to email the will, death certificate & my ID along with creating an online profile for the car 

Skint_yet_Again

Does anyone know what happens with council tax now the trust has ended. Legal owners are now the estate for dads share and the beneficiaries of the trust (mums share)? 

Am I correct that class F exemption does not apply although the property is unoccupied and in probate? We have received a letter from the council as a result of tell us once which I picked up this evening and of course they are closed until Monday! 

Keep_pedalling

You are fortunately incorrect, class F exemption does apply