Increase in Estate value- any effect on my inherited NRB?

Newly_retired

Since his death, and since Probate was obtained, I have sold many items from my late husband’s collections, which have, over time, substantially increased the value of his estate, which was divided three ways, so I am not the sole beneficiary.
When I completed Probate I had no idea that he had so many collectibles, and I greatly underestimated their value. Two experts in the field declined to put a value on them, as “an items is worth whatever you can get for it.”

I understand that there is no need to inform the Probate office of new figures, but I am wondering if the new figure affects any NRB which my estate would inherit? Obviously this will be for my own executors to sort. Whereas there was no IHT on my husband’s estate, there may be on mine perhaps? I am totally out of my depth here, but want to leave paperwork in good order for my executors. Is this something I need to worry about?

Keep_pedalling

Have you sold them as his executor and subsequently distributed the proceeds or have you sold them personally after inheriting them?

Newly_retired

i suppose have sold them as his executor as agreed. The other beneficiaries are my two stepchildren so it is only fair.

poseidon1

It seems to me you had made your best endeavours to obtain valuations for the chattels at date of death, but received no real indication from the experts consulted. You therefore in good faith used your own figure in ascertaining the net estate value for excepted estate purposes.

You indicated in a past post that you had no need to complete an IHT 400 ( which would have shown your chattel figure), so all you need for the future guidance on behalf of your children in dealing with your estate on death, is a clear indication of the chattel value figure you did use.

This together with any cash or other assets which you inherited from your husband, of which 2/3rds went to your step children, this will dictate the value to be deducted from his nil rate band in calculating the transferable amount due to your estate in future. You might go so far as providing a specific note to your executors calculating the NRB used in this way.

As for the subsequent disposals at values in excess of your estimate, as long as your proceeds in each case fell within the £6,000 chattels exemption for CGT purposes, then you have no estate administration CGT liabilties in respect of those profits. I assume you acquainted yourself with the terms of that CGT exemption?

artifin123

No need to let the Probate Office know anything. Just be sure to keep good records of what inheritance you got and what you sold. Your executors might have to include any money you made from the sales when figuring out inheritance for your own estate.

Newly_retired

Thank you.

Artifin, yes, I get that, thanks, but not sure how to do the actual sums.

poseidon1. Yes, his was an excepted estate, so no IHT 400 was needed.
Please could you explain your third paragraph?

Rough amounts (not actual figures) to use as a guide to provide figures for the sums.

estate’s Cash assets : £40,000
Sales of collectibles £59,000 ( estimated for Probate at £10,000).
Total £99,000
So each beneficiary inherited around £33,000.

Sorry, I am trying to make this simple, as numerical concepts are not my strong point.
Is it my third ( £33,000) I deduct from his NRB or their two thirds( £66,000)?

Or maybe £16.330 (ie a third of the cash and a third of the estimated value of collectibles) or £32.666? ( two thirds).

Many thanks.

In case it’s relevant, the property is in an IPD trust, to be sold when I die, proceeds then split in half, half for my two children, half for my two stepchildren. If my understanding is correct, the entire value of the property has to be included in my estate for IHT purposes. I’m not actually expecting my estate to be subject to IHT, unless the rules change, but the sums will need to be done, obviously including my personal savings as well. ( I save, he spent on collectibles).

Keep_pedalling

Your share of his assets would be subject to spousal exemption so it is the other two thirds which reduce the transferable NRB reducing it by 366k (20.6%).

Based on a previous thread you said the house is worth £300k which would mean your estate (included 100% of the house) would need to exceed £584k before an IHT return would be required (your NRB + transferable NRB) and over £845k before IHT would be payable (not possible to maximise both RNRBs on a house worth under £350k).

poseidon1

On the numbers you quoted for your husband's assets at date of death (2023?) I believe they are:

1. 50% of value of the house in trust ( £150k?) - this effectively counts as an exempt gift to you so no NRB used.
2. £40k cash of which 2/3rds went to step children ie £26,666 of husband's NRB utilised.
3. £10k probate valuation of chattels, of which again 2/3rds to step children ie £6,666 also utilised against husband's NRB

If I have captured all the pertinent assets you reported at date of death, the gross value on the grant of probate should total £200K, of which gifts to his children totalled £33,332 , is this correct?

If so only £33,332 of the £325K nrb has been utilised leaving £291,668 transferable to your estate assuming the NRB remains unchanged by then.

What you cannot do is unilaterally change the value of the chattels from the £10k you declared for probate ( and now enshrined as part of the gross estate value on the Grant ), with the £59K you eventually received from the future sales.

You need to protect the £49k apparent profit made from the sales from capital gains tax during the executor's administration period, by using the £6,000 individual chattels exemption I mentioned, assuming this applies to each and every item you later sold. Details of the exemption below -

https://www.gov.uk/government/publications/chattels-and-capital-gains-tax-hs293-self-assessment-helpsheet/personal-possessions-and-capital-gains-tax-2025-hs293#:~:text=3.3%20Example%202,chargeable%20gains%20of%20%C2%A328%2C800.

It is vanishingly rare for valuable chattels to arise on this forum in the context of deceased estates, so gets little or no discussion - the following is a general guide for the few estates this might apply

https://www.richardsonslaw.co.uk/site/library/trust/asset_valuation_problems_chattelshtml#:~:text=A%20side%20issue%20arising%20here,for%20the%20executors%20to%20know.

Finally, in case any single chattel did exceed the £6,000 exemption giving rise to a potential CGT liability, it maybe possible for you to construe all the sales as having been made jointly by all three defacto 'owners' rather than an executor's sale on behalf of the unadministered Estate. In this scenario you then have 3 lots of £6,000 exemptions available rather than the estate's single exemption. Depends how you handled the sales.

Newly_retired

Thank you very much for these most helpful replies.

NB figures were simplified, but I can now do my own sums in the light of the information given.

Re CGT, no single item or small sets exceeded the £6000 exemption, but the creative thinking is interesting.

My husband had not finished updating his will when he died so the existing will was out of date in terms of chattels. We had to apply the principles of his wishes to make it relevant to what he actually possessed at time of death, as far as was possible. Fortunately all executors and beneficiaries were in total agreement ( especially as I did all the hard work!)

Yes, it is nearly three years. The estate cannot be finalised yet because of another complication relating to the ownership of his mother’s property, of which various family members including my husband theoretically inherited a tiny proportion, but this is out of my hands at the moment and somebody else will need to foot that solicitor’s bill.
Hoping this does not affect the main thrust of my query.

Many thanks to all who generously share their time and expertise on this board.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81879978#Comment_81879978

Yes I did notice this fractional property share in a past post.

My impression was your husband's share ( whatever that is assessed at ) will not pass to you, so will also eat into his transferable nil rate band on the same basis as indicated above.

However, note you have grasped the general principles involved in ascertaining your husband's transferable NRB so you should be able to provide your executors with a reasonable computation to assist their efforts when time comes.