Large Estate - DIY Probate

pcgtron

Keep_pedalling said:

Assuming you are the named executor I would strongly recommend that you DIY this, not only will it save money but solicitors tend to add significant delays to the whole process. You should obtain professional (RICS) valuations for the properties but you would seem more than capable of dealing with administering this yourself.

Of the £2M how much is tied up in the two properties? The first issue that you may be facing is paying the IHT within 6 months of the death if the bulk of the estate is tied up in those properties, but you will have the option of paying by instalments. 

Approx 50 percent would be tied up in the properties. Providing I can get access to the funds outside of property before IHT is due, then there will be money in the estate to pay the IHT

pcgtron

poseidon1 said:

YBR said:

In the circumstances would suggest you DIY it, and potentially ask an accountant to check over the forms before you send them.

My mother went from having no hand in the household finances to DIY probate with very little assistance, but did ask the family accountant to check which gave confidence.

Sensible reccomendation, although the vast majority of people will be unfamiliar with the idea of a family accountant on annual retainer.

If seeking an accountant's input and guidance would reccomend seeking a Chartered tax accountancy firm who are members of ICAEW. 

OP mentions a 2nd property, then rental income during estate administration period may be in point, requiring ongoing estate income tax compliance as well as IHT computational work.

The tax compliance side of a large estate can be a steep learning curve for a newbie on a DIY basis, so paying a professional for a helping hand on overly technical issues can make sense.

Thank you for your response. The 2nd property was not a rental, just another home to live in for part of the year in a different part of the country, so no rental income to deal with. I have an accountant that deals with my limited company, and I know they have a probate department, so I'm sure they could help (For a fee) if I find myself stuck at any point

poseidon1

pcgtron said:

poseidon1 said:

YBR said:

In the circumstances would suggest you DIY it, and potentially ask an accountant to check over the forms before you send them.

My mother went from having no hand in the household finances to DIY probate with very little assistance, but did ask the family accountant to check which gave confidence.

Sensible reccomendation, although the vast majority of people will be unfamiliar with the idea of a family accountant on annual retainer.

If seeking an accountant's input and guidance would reccomend seeking a Chartered tax accountancy firm who are members of ICAEW. 

OP mentions a 2nd property, then rental income during estate administration period may be in point, requiring ongoing estate income tax compliance as well as IHT computational work.

The tax compliance side of a large estate can be a steep learning curve for a newbie on a DIY basis, so paying a professional for a helping hand on overly technical issues can make sense.

Thank you for your response. The 2nd property was not a rental, just another home to live in for part of the year in a different part of the country, so no rental income to deal with. I have an accountant that deals with my limited company, and I know they have a probate department, so I'm sure they could help (For a fee) if I find myself stuck at any point

In that case, and unlike most OPs who approach this forum I would think you have more than enough 'tools' to get the job done here.

I am a bit biased, and although legally qualified I am of the view that a good private client Accountant is of more use than the average solicitor  in these DIY situations especially as you indicate CGT and offshore bond taxation maybe aspects you may have to address.

Incidentally IHT is strictly due 6 months after death, whereafter interest on unpaid liabilty will run.

However as pointed out by Keep_pedalling, IHT attributable to the properties attract 10 year instalments ( at your request) so hopefully other assets can cover until such time properties get sold.

Savvy_Sue

pcgtron said:

My only question at the moment is do you have to pay IHT before probate is granted, or just have submitted the IHT forms to HMRC to agree the figure for IHT. If there is then time left on the 6 month clock, can you get probate granted before actually paying the IHT

If IHT is due, then my understanding is that it must be paid before probate is granted, or an agreement to pay in instalments made. But I'm beginning to doubt myself so perhaps someone who knows would answer! 

Keep_pedalling

Savvy_Sue said:

pcgtron said:

My only question at the moment is do you have to pay IHT before probate is granted, or just have submitted the IHT forms to HMRC to agree the figure for IHT. If there is then time left on the 6 month clock, can you get probate granted before actually paying the IHT

If IHT is due, then my understanding is that it must be paid before probate is granted, or an agreement to pay in instalments made. But I'm beginning to doubt myself so perhaps someone who knows would answer! 

An executor will need to have paid the full IHT bill or, if paying by instalments, at least the first instalment (min 10%) before probate can be obtained.

In extreme cases you might be able to obtain a grant on credit (see page 68 of the IHT400 notes)

https://assets.publishing.service.gov.uk/media/67efadf8d065389a655cef7e/IHT400_2022__Notes.pdf

Savvy_Sue

Keep_pedalling said:

Savvy_Sue said:

pcgtron said:

My only question at the moment is do you have to pay IHT before probate is granted, or just have submitted the IHT forms to HMRC to agree the figure for IHT. If there is then time left on the 6 month clock, can you get probate granted before actually paying the IHT

If IHT is due, then my understanding is that it must be paid before probate is granted, or an agreement to pay in instalments made. But I'm beginning to doubt myself so perhaps someone who knows would answer! 

An executor will need to have paid the full IHT bill or, if paying by instalments, at least the first instalment (min 10%) before probate can be obtained.

In extreme cases you might be able to obtain a grant on credit (see page 68 of the IHT400 notes)

https://assets.publishing.service.gov.uk/media/67efadf8d065389a655cef7e/IHT400_2022__Notes.pdf

Thank you, that's helpful. My 'doubt' lay in what would happen if the estate could neither raise nor borrow anything towards the IHT without a property being sold, but of course it can't be sold without probate - a Catch 22 situation. 

DippySkippy

If you have liquid assets then you can use the 'Direct Payment Scheme' to pay the IHT before probate. I'm just finishing DIY a £1.1m estate and the main issues I had were with chasing up banks & pensions. Buy a printer/scanner and keep track of everything in spreadsheets. I found Google's notebooklm very useful for interrogating various docs - the IHT manuals, forms, Trust Act etc.

A couple of useful things I found:

• I estimated the IHT so that I could pay prior to the 6 month deadline and avoid penalties. There was uncertainty about RNRB as needed a Deed of Variance to claim - so overpaid assuming worst case in the knowledge that HMRC actually pay you interest when refunding IHT overpayments!. Made more money than it would have sat in its bank account.
• Deed of Variance can be very useful
• HMRC will chase any unpaid income tax from previous 5 years and threaten penalties. These can be ignored as by law you have until 30 days after grant of probate to pay income tax (with no penalty).
• Shares - any loss in value between date of death and date of sale can be claimed later to reduce the IHT - though the shares must be sold within 1 year of death.

pcgtron

Thank you for all your comments. Really helpful and given me the confidence to do this myself, without the involvement of solicitors. 
I have now found all the assets, and am in the process of getting final values of investments on the death date. I have come across one unknown on the IHT400 form I was wondering if anyone could help with. 

There was an offshore life policy in the assets, that on date of death has created a chargeable gain. I'm not sure how to show this on the IHT400 form. Does it just go in the liabilites box of the estate. I.E: The total amount of the money payable gets put in the assets box, then the chargeable gain capital gains tax amount is a liabilty to be offset against the IHT due. This would feel the most sensible, but is it calculated against the gross of the estate (would this mean there would be double taxation) or deducted against the net of the estate? Anyone have any ideas? I spoke to an accountant on the phone earlier, but I'm none the wiser really

poseidon1

pcgtron said:

Thank you for all your comments. Really helpful and given me the confidence to do this myself, without the involvement of solicitors. 
I have now found all the assets, and am in the process of getting final values of investments on the death date. I have come across one unknown on the IHT400 form I was wondering if anyone could help with. 

There was an offshore life policy in the assets, that on date of death has created a chargeable gain. I'm not sure how to show this on the IHT400 form. Does it just go in the liabilites box of the estate. I.E: The total amount of the money payable gets put in the assets box, then the chargeable gain capital gains tax amount is a liabilty to be offset against the IHT due. This would feel the most sensible, but is it calculated against the gross of the estate (would this mean there would be double taxation) or deducted against the net of the estate? Anyone have any ideas? I spoke to an accountant on the phone earlier, but I'm none the wiser really

The chargeable event gain tax liabilty will  simply be part of your fathers's  total self assessment  tax liabilties due at date of death, so no need to identify it separately. It will be part of listed liabilities shown in box 82 page 9 of IHT 400  ( other liabilities).

Assuming the bond was not in trust, the gross bond proceeds will be  an estate asset as specifically detailed on supplementary form IHT410 ( insurance policies).

Bit of a concern that the accountant was not able to make this clear to you,  since it is not one of the more complicated aspect in completing the IHT 400. Does the accountant have actual hands on experience in handling IHT reporting matters?

pcgtron

Thank you to everyone that has helped so far. I finally got everything together and submitted the IHT400 form to HMRC. Now the waiting game for the probate code has started. I've also sent the direct paymen form to the financial company holding the ISA's to pay the IHT bill from. Clocks ticking, lets see how long this bit takes.......