Liferent Trust (Scotland) with Confirmation/IHT questions

jem16

Mum died March 2024 and Liferent Trust came into being with Dad given Liferent use of property till his death. Value of house £200k so half share of £100k in Mum’s Confirmation application. Granted July 2024.

Dad died January 2025 so Liferent Trust died with him. House valued at £230k for Confirmation purposes. Lawyer put half share of £115k in Confirmation for estate with a total value of £500k. In the box for IHT purposes she put £600k. I’d always assumed that this was the £500k plus £100k from Mum’s half of the house but now I’m not so sure. Confirmation granted in July 2025.

My understanding now is that Dad’s estate should have included the full value of the house as he had beneficial ownership due to the trust. Any CGT due on the house is based on the £230k value at his date of death.

Now I’m wondering if his Confirmation application was completed correctly or incorrectly. Fortunately it will not matter for IHT purposes as still below both NRBs but if it’s wrong will it cause us a problem either in wrapping up the estate or later when we report estate administration informally to HMRC?

poseidon1

jem16 said:

Mum died March 2024 and Liferent Trust came into being with Dad given Liferent use of property till his death. Value of house £200k so half share of £100k in Mum’s Confirmation application. Granted July 2024.

Dad died January 2025 so Liferent Trust died with him. House valued at £230k for Confirmation purposes. Lawyer put half share of £115k in Confirmation for estate with a total value of £500k. In the box for IHT purposes she put £600k. I’d always assumed that this was the £500k plus £100k from Mum’s half of the house but now I’m not so sure. Confirmation granted in July 2025.

My understanding now is that Dad’s estate should have included the full value of the house as he had beneficial ownership due to the trust. Any CGT due on the house is based on the £230k value at his date of death.

Now I’m wondering if his Confirmation application was completed correctly or incorrectly. Fortunately it will not matter for IHT purposes as still below both NRBs but if it’s wrong will it cause us a problem either in wrapping up the estate or later when we report estate administration informally to HMRC?

I would hope the £600k figure included the entire £230k value of house as at your father's date of death for IHT reporting purposes. The original £200k valuation on your mother's prior death became a nullity and irrelevant when your father died. The entire market value of the house was uplifted to £230k on his death.

Was an IHT 400 ever prepared by the lawyer so you can see the actual breakdown?  

On the figures you quote , worse case scenario the IHT value of the estate was understated by £15k but not sufficient to bring the estate within the ambit of an actual IHT charge.

For your own piece of mind you  could ask how they arrived at the £600k figure. If this was an error by them you could ask  whether a C4 (S) corrective inventory is necessary, although I see no reason why you should be paying for it, if its their oversight.

As for your later estate administration tax compliance, that will solely relate to any income tax and CGT compliance which will be handled by an entirely separate arm of the HMRC inspectorate. That division  does not concern itself with IHT compliance/ reporting matters.

jem16

Thanks. From what I can see only £115k was used for the value of the estate as listed as “half share of the deceased”. As this was how it was listed with Mum’s application I knew no better than to question it. It does mention the £230k valuation on the description but then halves it for the actual amount. 

I noted that the IHT figure was £100k higher but again assumed (wrongly as appears to be the case) that this was the uplift from my Mum’s share of the house. Now I’m thinking it was actually just another mistake and she meant to write £500k.

Confirmation was granted for £500k and stated as Dad’s half share of the house. 

I doubt IHT 400 would have been done as it’s listed as an excepted estate so no need to do one I think?

After our last conversation I decided that I was going to handle the informal reporting myself so that I knew it would be correct. I’ve informed her of that and will simply get the interest figures from her. 

I will certainly ask how the £600k figure was arrived at but wanted to be sure of my facts first. Fortunately the conveyancing lawyer is with the same firm otherwise I’d be wondering if we can legally sell the house given the total value wasn’t included for Confirmation purposes but perhaps that doesn’t matter as it’s more an IHT thing? Fortunately it’s still below IHT level even with that extra £15k.

We used a solicitor to ensure things were done correctly but now I’m not so sure given what’s been happening. 

poseidon1

jem16 said:

Thanks. From what I can see only £115k was used for the value of the estate as listed as “half share of the deceased”. As this was how it was listed with Mum’s application I knew no better than to question it. It does mention the £230k valuation on the description but then halves it for the actual amount. 

I noted that the IHT figure was £100k higher but again assumed (wrongly as appears to be the case) that this was the uplift from my Mum’s share of the house. Now I’m thinking it was actually just another mistake and she meant to write £500k.

Confirmation was granted for £500k and stated as Dad’s half share of the house. 

I doubt IHT 400 would have been done as it’s listed as an excepted estate so no need to do one I think?

After our last conversation I decided that I was going to handle the informal reporting myself so that I knew it would be correct. I’ve informed her of that and will simply get the interest figures from her. 

I will certainly ask how the £600k figure was arrived at but wanted to be sure of my facts first. Fortunately the conveyancing lawyer is with the same firm otherwise I’d be wondering if we can legally sell the house given the total value wasn’t included for Confirmation purposes but perhaps that doesn’t matter as it’s more an IHT thing? Fortunately it’s still below IHT level even with that extra £15k.

We used a solicitor to ensure things were done correctly but now I’m not so sure given what’s been happening. 

Sadly as regards probate and IHT compliance and in view of some of the stories that appear on this forum, the competency of some solicitors seem to leave a lot to be desired. Couple that with often outrageous fee scales, it's no surprise many resort to DIY.  

buddy9

If the house was owned in pro indiviso shares, the entries for confirmation, so far as can be determined from your post, look ok.

The £600k value for IHT purposes is a slight mystery. It might be an entry which accounts for a discount in value for joint house ownership, but has been incorrectly calculated.

jem16

buddy9 said:

If the house was owned in pro indiviso shares, the entries for confirmation, so far as can be determined from your post, look ok.

The £600k value for IHT purposes is a slight mystery. It might be an entry which accounts for a discount in value for joint house ownership, but has been incorrectly calculated.

Yes the house was owned in pro indiviso shares and on Mum’s death her half share passed to my brother and I with the Liferent Trust set up to ensure Dad could stay in the house till his death. So presumably Confirmation for both of them is what allows us to sell the house?

@poseidon1 thinks it should be but does the Scottish system work differently in calculating IHT due when a Liferent Trust is involved?

So question is do I bother asking how it came about or does it not matter anyway given that the £615k is still within the 2 NRBs that are due? Normally I would for my own peace of mind as I like to know but is it worth whatever charges are involved for reading/writing an email? I’ll need to see/speak to her before it’s all wrapped up as I want to do a Deed of Variation on my half of the estate. I feel like I could just write a letter saying what I want but no doubt there’s some necessity in Scottish law that requires a lawyer to ensure it’s done correctly.

poseidon1

jem16 said:

buddy9 said:

If the house was owned in pro indiviso shares, the entries for confirmation, so far as can be determined from your post, look ok.

The £600k value for IHT purposes is a slight mystery. It might be an entry which accounts for a discount in value for joint house ownership, but has been incorrectly calculated.

Yes the house was owned in pro indiviso shares and on Mum’s death her half share passed to my brother and I with the Liferent Trust set up to ensure Dad could stay in the house till his death. So presumably Confirmation for both of them is what allows us to sell the house?

@poseidon1 thinks it should be but does the Scottish system work differently in calculating IHT due when a Liferent Trust is involved?

So question is do I bother asking how it came about or does it not matter anyway given that the £615k is still within the 2 NRBs that are due? Normally I would for my own peace of mind as I like to know but is it worth whatever charges are involved for reading/writing an email? I’ll need to see/speak to her before it’s all wrapped up as I want to do a Deed of Variation on my half of the estate. I feel like I could just write a letter saying what I want but no doubt there’s some necessity in Scottish law that requires a lawyer to ensure it’s done correctly.

The basis for computing IHT charges is the same in Scotland as it is in England and Wales but since Scotland has its own distinctive trust terminolgy and concepts compared to E& W  using a solicitor to draft your DOV document is probably adviseable.

You could then as an ancillary question, flat out ask  whether an error was made  by them in calculating the IHT value of the estate and whether this might adversely affect the veracity of the DOV you want drafted.

This then leaves them to decide if the relevant T's have been crossed and i's dotted before taking on additional work from you. Just make it clear in your question that you will not be paying to rectify their error if they feel a  C4 (S) corrective inventory might be needed.

Having said the above, hopefully some of the very few posters with direct knowledge and experience of Scottish Confirmation/ Probate process, might proffer their view as to the necessity of  involving a solicitor in drafting your DOV. My own view is the asset of the now terminated Life Rent trust is the complicating factor since that is not capable of variation ( never an actual part of your father 's estate other than for the notional amalgamation for IHT calculation purposes).

Perhaps @buddy9 could chip in if he has been following this thread?

jem16

poseidon1 said:

jem16 said:

buddy9 said:

If the house was owned in pro indiviso shares, the entries for confirmation, so far as can be determined from your post, look ok.

The £600k value for IHT purposes is a slight mystery. It might be an entry which accounts for a discount in value for joint house ownership, but has been incorrectly calculated.

Yes the house was owned in pro indiviso shares and on Mum’s death her half share passed to my brother and I with the Liferent Trust set up to ensure Dad could stay in the house till his death. So presumably Confirmation for both of them is what allows us to sell the house?

@poseidon1 thinks it should be but does the Scottish system work differently in calculating IHT due when a Liferent Trust is involved?

So question is do I bother asking how it came about or does it not matter anyway given that the £615k is still within the 2 NRBs that are due? Normally I would for my own peace of mind as I like to know but is it worth whatever charges are involved for reading/writing an email? I’ll need to see/speak to her before it’s all wrapped up as I want to do a Deed of Variation on my half of the estate. I feel like I could just write a letter saying what I want but no doubt there’s some necessity in Scottish law that requires a lawyer to ensure it’s done correctly.

The basis for computing IHT charges is the same in Scotland as it is in England and Wales but since Scotland has its own distinctive trust terminolgy and concepts compared to E& W  using a solicitor to draft your DOV document is probably adviseable.

You could then as an ancillary question, flat out ask  whether an error was made  by them in calculating the IHT value of the estate and whether this might adversely affect the veracity of the DOV you want drafted.

This then leaves them to decide if the relevant T's have been crossed and i's dotted before taking on additional work from you. Just make it clear in your question that you will not be paying to rectify their error if they feel a  C4 (S) corrective inventory might be needed.

Having said the above, hopefully some of the very few posters with direct knowledge and experience of Scottish Confirmation/ Probate process, might proffer their view as to the necessity of  involving a solicitor in drafting your DOV. My own view is the asset of the now terminated Life Rent trust is the complicating factor since that is not capable of variation ( never an actual part of your father 's estate other than for the notional amalgamation for IHT calculation purposes).

Perhaps @buddy9 could chip in if he has been following this thread?

All I want the Deed of Variation to do is to take my half share of the estate after everything has been calculated - only the house remains to finalise - and give most of it to my sons instead of me. I’m looking ahead to keeping my own estate out of IHT territory.

poseidon1

jem16 said:

poseidon1 said:

jem16 said:

buddy9 said:

If the house was owned in pro indiviso shares, the entries for confirmation, so far as can be determined from your post, look ok.

The £600k value for IHT purposes is a slight mystery. It might be an entry which accounts for a discount in value for joint house ownership, but has been incorrectly calculated.

Yes the house was owned in pro indiviso shares and on Mum’s death her half share passed to my brother and I with the Liferent Trust set up to ensure Dad could stay in the house till his death. So presumably Confirmation for both of them is what allows us to sell the house?

@poseidon1 thinks it should be but does the Scottish system work differently in calculating IHT due when a Liferent Trust is involved?

So question is do I bother asking how it came about or does it not matter anyway given that the £615k is still within the 2 NRBs that are due? Normally I would for my own peace of mind as I like to know but is it worth whatever charges are involved for reading/writing an email? I’ll need to see/speak to her before it’s all wrapped up as I want to do a Deed of Variation on my half of the estate. I feel like I could just write a letter saying what I want but no doubt there’s some necessity in Scottish law that requires a lawyer to ensure it’s done correctly.

The basis for computing IHT charges is the same in Scotland as it is in England and Wales but since Scotland has its own distinctive trust terminolgy and concepts compared to E& W  using a solicitor to draft your DOV document is probably adviseable.

You could then as an ancillary question, flat out ask  whether an error was made  by them in calculating the IHT value of the estate and whether this might adversely affect the veracity of the DOV you want drafted.

This then leaves them to decide if the relevant T's have been crossed and i's dotted before taking on additional work from you. Just make it clear in your question that you will not be paying to rectify their error if they feel a  C4 (S) corrective inventory might be needed.

Having said the above, hopefully some of the very few posters with direct knowledge and experience of Scottish Confirmation/ Probate process, might proffer their view as to the necessity of  involving a solicitor in drafting your DOV. My own view is the asset of the now terminated Life Rent trust is the complicating factor since that is not capable of variation ( never an actual part of your father 's estate other than for the notional amalgamation for IHT calculation purposes).

Perhaps @buddy9 could chip in if he has been following this thread?

All I want the Deed of Variation to do is to take my half share of the estate after everything has been calculated - only the house remains to finalise - and give most of it to my sons instead of me. I’m looking ahead to keeping my own estate out of IHT territory.

I appreciate that, but in your case only  25% of the house proceeds ( via the estate ) is what you are able to divert to your sons with this treated as if your father made that gift under his will. The other 25% you now own personally via the life rent trust, so  it is getting the wording right to show this distinction.

Please note as the 25% previously held in the liferent trust is already now in your estate, you can only divest yourself of all or part of that by way of personal gift, with the 7 year  survival clock running thereafter.

jem16

poseidon1 said:

jem16 said:

poseidon1 said:

jem16 said:

buddy9 said:

If the house was owned in pro indiviso shares, the entries for confirmation, so far as can be determined from your post, look ok.

The £600k value for IHT purposes is a slight mystery. It might be an entry which accounts for a discount in value for joint house ownership, but has been incorrectly calculated.

Yes the house was owned in pro indiviso shares and on Mum’s death her half share passed to my brother and I with the Liferent Trust set up to ensure Dad could stay in the house till his death. So presumably Confirmation for both of them is what allows us to sell the house?

@poseidon1 thinks it should be but does the Scottish system work differently in calculating IHT due when a Liferent Trust is involved?

So question is do I bother asking how it came about or does it not matter anyway given that the £615k is still within the 2 NRBs that are due? Normally I would for my own peace of mind as I like to know but is it worth whatever charges are involved for reading/writing an email? I’ll need to see/speak to her before it’s all wrapped up as I want to do a Deed of Variation on my half of the estate. I feel like I could just write a letter saying what I want but no doubt there’s some necessity in Scottish law that requires a lawyer to ensure it’s done correctly.

The basis for computing IHT charges is the same in Scotland as it is in England and Wales but since Scotland has its own distinctive trust terminolgy and concepts compared to E& W  using a solicitor to draft your DOV document is probably adviseable.

You could then as an ancillary question, flat out ask  whether an error was made  by them in calculating the IHT value of the estate and whether this might adversely affect the veracity of the DOV you want drafted.

This then leaves them to decide if the relevant T's have been crossed and i's dotted before taking on additional work from you. Just make it clear in your question that you will not be paying to rectify their error if they feel a  C4 (S) corrective inventory might be needed.

Having said the above, hopefully some of the very few posters with direct knowledge and experience of Scottish Confirmation/ Probate process, might proffer their view as to the necessity of  involving a solicitor in drafting your DOV. My own view is the asset of the now terminated Life Rent trust is the complicating factor since that is not capable of variation ( never an actual part of your father 's estate other than for the notional amalgamation for IHT calculation purposes).

Perhaps @buddy9 could chip in if he has been following this thread?

All I want the Deed of Variation to do is to take my half share of the estate after everything has been calculated - only the house remains to finalise - and give most of it to my sons instead of me. I’m looking ahead to keeping my own estate out of IHT territory.

I appreciate that, but in your case only  25% of the house proceeds ( via the estate ) is what you are able to divert to your sons with this treated as if your father made that gift under his will. The other 25% you now own personally via the life rent trust, so  it is getting the wording right to show this distinction.

Please note as the 25% previously held in the liferent trust is already now in your estate, you can only divest yourself of all or part of that by way of personal gift, with the 7 year  survival clock running thereafter.

A bit more complicated than I’d envisaged so thanks for that. I will use the solicitor in that case to ensure all is done correctly. I’d planned to take some anyway and spend it on new kitchen etc so that 25% I own regardless will probably be about right anyway. At least I’ll know what to expect in discussions and can then bring up the IHT amount on Dad’s estate. 

jem16

poseidon1 said:

jem16 said:n

buddy9 said:

If the house was owned in pro indiviso shares, the entries for confirmation, so far as can be determined from your post, look ok.

The £600k value for IHT purposes is a slight mystery. It might be an entry which accounts for a discount in value for joint house ownership, but has been incorrectly calculated.

Yes the house was owned in pro indiviso shares and on Mum’s death her half share passed to my brother and I with the Liferent Trust set up to ensure Dad could stay in the house till his death. So presumably Confirmation for both of them is what allows us to sell the house?

@poseidon1 thinks it should be but does the Scottish system work differently in calculating IHT due when a Liferent Trust is involved?

So question is do I bother asking how it came about or does it not matter anyway given that the £615k is still within the 2 NRBs that are due? Normally I would for my own peace of mind as I like to know but is it worth whatever charges are involved for reading/writing an email? I’ll need to see/speak to her before it’s all wrapped up as I want to do a Deed of Variation on my half of the estate. I feel like I could just write a letter saying what I want but no doubt there’s some necessity in Scottish law that requires a lawyer to ensure it’s done correctly.

The basis for computing IHT charges is the same in Scotland as it is in England and Wales but since Scotland has its own distinctive trust terminolgy and concepts compared to E& W  using a solicitor to draft your DOV document is probably adviseable.

You could then as an ancillary question, flat out ask  whether an error was made  by them in calculating the IHT value of the estate and whether this might adversely affect the veracity of the DOV you want drafted.

This then leaves them to decide if the relevant T's have been crossed and i's dotted before taking on additional work from you. Just make it clear in your question that you will not be paying to rectify their error if they feel a  C4 (S) corrective inventory might be needed.

Having said the above, hopefully some of the very few posters with direct knowledge and experience of Scottish Confirmation/ Probate process, might proffer their view as to the necessity of  involving a solicitor in drafting your DOV. My own view is the asset of the now terminated Life Rent trust is the complicating factor since that is not capable of variation ( never an actual part of your father 's estate other than for the notional amalgamation for IHT calculation purposes).

Perhaps @buddy9 could chip in if he has been following this thread?

Met with the lawyer yesterday. Yes the IHT figure was wrong and should have been £15k higher. She could offer no explanation only asking if we’d ever considered using £200k as the value of the house on Dad’s death. We hadn’t. 

I’ve been assured that it won’t matter nor need to be changed as it’s still below the value of my parents’ NRBs.

The figures I asked for with respect to the DOV were not questioned and the Liferent Trust for my mother not mentioned until I brought it up when it was obvious it wasn’t going to be. I’d purposely kept my figures in line with the 25% coming to me via the Trust as you’d alerted me to it and she may well have brought it up once she’d gone through the figures and drafted the DOV.

One question she did ask when I brought it up was when Mum died. As it’s still within 2 years I wondered if she was thinking DOV on Mum’s will but you’re saying that’s not capable of being varied. Is that because it’s a trust?