Gross probate value

jhague53

My parents owned their property tenants in common 50% share each. My dad died in 2016 with the value of his share being in a protected property trust in the will with my mum having a life time interest in the property until her death

My mum has now died so my question is regards the gross probate value. The value of the property is 235000. My understanding is that only her share 50% of the property value is considered for the probate value which would be 117500 but how does that affect the sale of the property

Keep_pedalling

it would help to see the exact wording (personal details redacted) of the clause in your fathers will regarding the property to confirm this but normally legal ownership passes to the trust but beneficial ownership passes to the surviving spouse. This uses none of the deceased spouse’s NRB and for IHT purposes the whole house counts as part of your mother’s estate but probate value is just her share.

Was the trust ever registered with HMRC?

jhague53

They owned the property as tenants in common 50/50. The trust was part of the will and we were never told to register it. It was a straight forward (as can be) to protect their share being used for care fees after their death for the surviving spouse. I believe it is called a protected property trust with a lifetime interest for my mum(she could stay there until her death. The executors of the will are also the trustees. My father was the first to die and so at that time his share of the property is protected (belong to the benficiaries in his will)until we can sell the property upon my mums death.. There was nothing passed to my mother.

My question really was now my mum has died she still only owns 50% so if I enter this value in the Gross Probate value does that affect what we sell the house for? I just dont want to cause any tax issue. Do HMRC use the property valuation that has been entered in the IHT

BTW there is no IHT

Thanks

Wording

RAS

If the trustees never registered with HMRC, probate is gong to trigger queries. It's been a legal requirement for at least five years, possibly ten. There were massive media campaigns and our solicitor even wrote to every client with whom they'd ever had dealing re wills or probate.

The executors or trustees need to sort this now, as there are penalties for non-compliance that need to be paid unless they can plead forbearance.

Keep_pedalling

At the time of his death am immediate post death interest trust was created and in 2016 these type of trusts did not need to be registered however that changed on 6th October 2020 and trusts created prior to that date had to be registered by 6th Oct 2022.

Most lay trustees would not be away of that change and so many trusts like this one have never been registered. I am not aware of HMRC penalising anyone for this as there is no financial loss. You should probably take professional advice on retrospectively registering it and winding it up.

poseidon1

https://forums.moneysavingexpert.com/discussion/6685795/gross-probate-value

To answer your question, it is the entire £235k value of the property you report for probate purposes on your mother's death.Reason being she is 'deemed' to also own the trust 50% held for her benefit for probate and IHT purposes.

Please note if her entire estate including the trust is below £650k in value, it should benefit from excepted estate status permitting you to 'fast track' online probate application as explained below -

https://www.gov.uk/valuing-estate-of-someone-who-died/check-type-of-estate

As for failure to register the trust originally, you can rectify this yourself by using the process in the link below to simultaneously report the original creation of the trust ( on your father's date of death) followed by its termination on your mother's death. Its not an especially onerous process, at least 1 other OP managed to do so in your circumstances and no HMRC penalty was levied for registration and subsequent termination.

https://www.gov.uk/guidance/register-a-trust

jhague53

many thanks to all who have commented. I have now registered the trust so fingers crossed