Advise about Probate.Hyperthetical

otb666

I hope you can explain for me.

Say you had 300k joint owners house

300k pension pot and

200k in ISA split between married couple apart from pension pot which is husbands

When husband or wife dies first probate would still be needed for ISA 100K

Then when second person passed away your children would need probate ( their 2 children) but would only have 900k allowance but the 100k would in included in Probate again Thus using up the allowance twice.

I know the figures are not near IHT but with inflation and possible future changes want to get by head around this double dipping of allowances when money is in ISA or even above bank account thresholds for when probate is needed.

poseidon1

No nil rates bands are used at all in your scenario, the surviving spouse on 2nd death still has £1 million in NRBs.

Not clear why you believe £100k of NRB has 'disappeared', unless the surviving spouse did not inherit the deceased's £100k isa and instead that went to children.

The act of obtaining probate has nothing to do with availability of NRBs, so no 'double dipping' in this regard.

p00hsticks

Just because you might need probate following the first death in order to access the ISA, it doesn't mean that it uses up any of the IHT allowance - and if probate is needed you need to declare the whole of the deceased estate, not just the part that you need probate to access.

Assuming everything is left to the spouse on the first death, then there would be no IHT due as it would be an excepted estate - at present the pension would fall outside of the estate, although this is supposed to be changing.

On the second death the total allowance available in the scenario you describe is actually £950k, less than the maximum £1million possible, but it's nothing to do with 'double dipping' the ISA - it's because the value of the property is under the maximum £350k that is covered by 2 x the £175k Residential Nil Rate Band.

So assuming the property value remains at £300k and is left to direct descendants, the total IHT allowance would be 2 x £325k NRB and £300k RNRB. = £950k.

otb666

Thank you I thought when the first person dies in order to transfer ISA to husband or wife you would need probate. Then when you completed second probate you would have to deduct this from NRB. Does the first probate amount come into play at all?

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/81880537#Comment_81880537

Everything passing to a spouse is covered by spousal exemption so does not impact the transferable NRB.

otb666

Thank you after watching Martins covering this on TV got me thinking about it all. I knew you all would be the best to ask as I am not very good at explaining my inner brains worries and glad I asked now.