Excepted Estate Clarification

Scand_Noir

Hi All

I would welcome clarification of my situation if anyone can help.

My Mum died in 2013. All bank accounts were joint and she and my dad jointly owned their home.

Her will left everything to Dad and he did no probate or other paperwork and just carried on as usual (finance wise).

My Dad died a few weeks ago but for the last 2-3 years my sibling and I have been POA and handled all his finances. We knew he was dying so took steps to simplify finances even further. Sold his remaining shares and cashed in premium bonds. His estate now comprises 2 cash isas, a few hundred in current account plus value of property. Pensions were local authority so ceased on death.

My questions are:

Value of isas and property is approx £590k. Am I correct in thinking this qualifies as an exempt excepted estate?

My dad gave my sibling and I about £25k each in the months before he died. This was mostly so we could pay for repairs to the property which he couldn't face happening whilst he was living there, funeral costs, etc. He gave us far too much and now I'm worried that this takes us almost right up to the limit of the £650k NRBs of both my parents. It wasn't gifts for us as such but to be used on his house but obviously could look that way.

We haven't informed the bank of my dads death yet so it would be quite possible to pay about £30k of what he gave us back into his bank account so that we weren't close to the £650 limit. Would this be allowed, would it be fraudulent? He was trying to do the right thing but may have tripped us all up! Basically I'd love not to have to fill in all the IHT forms.

If we want to use his RNRB can that be done as part of the exempt excepted estate or does that trigger having to fill in IH400 etc?

Thanks for any help anyone can give.

Keep_pedalling

Even if you could pay the money back into his bank account it makes no difference to the value of his estate whether it was a gift or he still had the money was still his that amount is part of his estate for IHT purposes.

Even if the value come in at over £650k no IHT will be due but you will need to do a full IHT return before you can apply for probate.

Have you had the house valued yet?

If I was administering an estate that was very close to 650k I would probably go down the route of doing an IHT return and value the house on the high side. This would avoid facing a challenge from HMRC or having a CGT liability if the house sells for more than the probate valuation.

Scand_Noir

Thanks for your reply. I'm not sure why there would be a CGT liability?

Savvy_Sue

Are either or both of you living in his house? If not, that's where a potential CGT liability kicks in.

RAS

When you dad was alive, he could have sold the house without incurring CGT providing he had lived in it recently.

Unless you and your sibling live in the house, the estate will become liable for CGT on any increase in value between the date of death and date of sale.

If you price the house low to avoid filling in the RNRB you increase the chance of making a material gain and incurring CGT.

There's no IHT to pay which ever, so the price for not filling in IHT400 could be a CGT bill to pay within 60 days of sale.

Scand_Noir

Thank you so much, I had no idea about the CGT possibility. I will bite the bullet and fill in the forms and as keep_ pedalling said, maybe put a higher value on the property from the ranges given by estate agents. There will be no IH tax to pay anyway so that's valuable advice. Thanks again.

Keep_pedalling

The task is not to complicated especially as you took steps to simplify how his assets were held before his death. You will get plenty of help here if you you get stuck.