Do I need a solicitor? IHT payable

The_Librarian

I recently lost a parent. I was all geared up to do all the probate paperwork myself (they had done it countless times, how hard could it be?), however everyone I mention this to looks at me funny and recommends a solicitor…

I have already gathered all the financial details (car, house values etc) and notified all relevant parties. It seems a simple estate (they were divorced, house, car, bank account and an ISA, will states everything goes to me), but it will be well into IHT territory so I will have a lot of paperwork.

I am still getting my head around all the steps (applied for a reference number so far), and what I thought was one form looks to be a lot! And in MSE style, I am wondering whether I could potentially save money using a solicitor as I keep hearing the tax people are less likely to scrutinise figures which have been rubber stamped by a professional(?), and I might be being overly honest with all my numbers.

Any advice at this stage gratefully received. Thank you.

poseidon1

I assume you have already looked at form IHT 400 and the extensive supporting guidance notes?

Only you can judge your own level of numeracy skills and ability to comprehend the less than intuitive nature of the IHT 400, to determine if you can handle this unaided.

What will help is whether there is sufficient non property assets to pay all the IHT in one hit within the 6 month time limit, otherwise you would have to fall back on the 10 year instalment plan for the tax on the house.

Generally I can't see a solicitor necessarily saving you money if you are capable of handling the IHT 400 yourself, but they could potentially complete it more rapidly than you so a possible time and stress saving.

Would help others here to put flesh on the bones, if you can provide approximate numbers for each category of assets, and whether your mother was a self assessment tax return filer pre death.

Assuming she made no substantial lifetime gifts to you pre-death, we note her maximum nil rate bands are just £500k so how bad is the IHT exposure?

happyshopper

I did my parent's probate myself, but paid for an hour of a probate solicitor's time to check that I understand certain elements of the forms correctly. All went fine and no IHT was payable in the end, but it was close-ish to the threshold so wanted to be sure it was correct and wouldn't be queried.

hs

Technosaurus

Sorry for your loss @The_Librarian

To be honest, if you've already gathered all the details yourself you are a significant way through already. Adding a solicitor simply adds another layer to what you have already done. Where they 'earn' their fee is chasing all that down for people who are too bereaved/grief stricken to do it themselves, and then do the relevant forms

It's therefore just an internal consideration as to whether you have:

• the time and inclination
• the record keeping skills
• the ability to understand, check and complete the various forms

I have personally found HMRC/the probate office to be quite helpful at navigating things when I've DIY'd it, it's just you have to get used to their glacial pace - automatic emails telling you it could be up to 8-12 weeks to receive a reply, or hanging on phonelines for hours upon hours.

If you don't have to go to work or can be flexible, this isn't a problem… if you have a 9-5 job then it becomes cumbersome wasting lunch breaks etc doing it. Without wanting to sound vulgar, it looks like you will "inherit well" so it's just whether you're happy to spend your time or spend some money getting to the "end" of the bureaucracy. I personally strangely enjoyed doing all the admin for my parents' estate, whereas my wife would have gladly paid someone else to do it when her Dad passed away.

The_Librarian

Thank you for your replies. @poseidon1 - no gifts, so yes, 500k allowance.

House alone is worth c.700k, and other assets bring in a further 200k, which should hopefully cover the IHT and allow me to keep the house. It's very reassuring to hear that not everyone thinks I need a solicitor! I am good at following instructions…I am finding the Gov.uk guidance confusing to follow, but think I am getting there. I have printed off a copy so I could read through and find all the notes at the same time to check I was doing things right. My big concern is the house valuation - I have had 2 agents value for probate, and guess I will use the higher one which seems more in line with local sale prices (the other one wanted to value at less than was paid for it two years ago, despite being unable to show me any comparables locally) but I do wish I could use the lower one! I also got a bit confused by the downsizing allowance - the house purchased 2 years ago was c. 70k cheaper than the old one.. Do I have to note that on the IHT435 form?

I do like the idea of just getting a solicitor to look over the final version before I submit - definite food for thought. Thank you all.

Keep_pedalling

For simple estates, solicitors just add expense and prolong the process considerable. The downsizing rule would only needed if she moved into something below £175k or moved into rented accommodation so no need to mention her previous home.

If you are keeping the house you should get a professional valuation for it.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82137293#Comment_82137293

Ok looks as if IHT will wipe out the lion's share of ISA/cash but you seem ok to keep the house on those numbers.

The residence nil rate band is only worth £175,000 so with a £700k inherited property the downsizing provisions becomes irrelevant. Your mother would have had to downsize to a property valued under £175k, for downsizing provisions to be appropriate and a issue on the IHT form.

How much lower is the other cheaper valuation? Would it be reasonable to opt for an average between the two?

Are you planning to move into the house, so you are not concerned about any immediate capital gains issues?

Generally, you could have a good go at the IHT 400 yourself. If any hiccups you could return to this forum for assistance but ultimately a solicitor to finalise and submit on your behalf is always a fallback option.

Interesting that your friends and family circle expressed surprise at your going it alone with this process rather than automatically using a solicitor. Possibly more a reflection of their own lack of confidence in their own abilities to engage with unfamiliar legal and taxation processes?

The_Librarian

Thank you both. Downsizing definitely does not apply then!

Yes, the current plan is to move in and sell my place, as I have no idea where I would put half of the sentimental (but ancient and worthless to anyone but me) furniture bits otherwise- my house is rather small! The price difference between the two agents is 25k. It was purchased at 675, one valuation 650, the other 675. Other properties locally going for 700/750k though, so I don't want to raise alarm bells in the tax office by going with a lower one. Would it be scrutinised if I used a mid-ground? Or should I try to get a 3rd valuation?

Should I be concerned about CGT in the future if I live there?

saajan_12

A solicitor can help with the legwork and cut short the effort to understand you're doing the right thing. However if you've already done much of hte legwork and seem to be a detail oriented person who likes to understand the mechanics, then it seems limited help you you, while it does add another layer of explaining everything to them.

I don't buy the "less likely to scrutinise figures which have been rubber stamped by a professional" argument as a money saving measure. If anything I'd expect more leniency in penalties if you made a mistake vs a professional, and people often pay professionals to find some 'creative accounting' to underpay, so they arent inherently more trustworthy. Conspiracies aside, I think it makes no difference, HMRC probably just have a script to scan everything and then in depth check a sample regardless of submittor.

Summary: I don't think its necessary, but you can always get one if it gets overwhelming.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82137363#Comment_82137363

So £700k is your own valuation based on what you have observed other properties in the locality have actually sold for?

Did you use a resource such as Rightmove's below which uses the land registry database, to identify similar properties sold in your mother's post code?

https://www.rightmove.co.uk/house-prices.html

This Is the same data HMRC would intially have access to, so no point overvaluing if this is not the resource you used when arriving at your figures.

I would certainly want to keep 40% of £25k in my pocket if the £675k valuation can be justified.

As to future capital gains tax, this will depend on how quickly you sell your own residence before ultimately moving in. But the longer you then go on to live in your mother's property before future disposal, the more likely time apportionment of the period of non occupation will minimise your CGT exposure.

The_Librarian

Thank you. I've used two local agents so far. Local sold prices on RM vary wildly depending on the road, from 600k-1.2m for the same number of bedrooms. Only one has sold in the same road since purchase, and was for 695, but that one has an extended kitchen, and a double garage. Agents both said if I was to sell on open market they would put it at offers over 700 (hence my concern when the same agent gave me a 650 valuation for probate!). Of course, I would love to use 650 for probate, but I don't want to get burnt.