Net or Gross Probate and Premium bond winnings

weezie7 · 24 January at 1:03PM

I am Executor of a will. I have a Grant of Probate which indicates both the Gross and Net worth of the estate. It is under the IHT threshold. How do I work out the percentages for legacies to charities, is it on the Gross or Net value of the estate as specified in the Grant of Probate?

Also the actual Gross amount is slightly different to what is on the Grant, due to a couple of payments not accounted for.

Also, the person had some Premium Bonds, which are still there. They have 'won' about £200 since the death, which is not included in the Grant money. Do I need to add them into the estate, as they have 'won' after the death? All the other monies have been finalized on the date of death, hence my workings out!

Many thanks

SiliconChip · 24 January at 1:21PM

It's unlikely that either the net or gross figure on the Grant will be the correct one to use, for instance if there are savings accouns involved then they will have carried on earning interest until you send in the grant to allow the accounts to be closed. And you've already found one exception, the PB winnings form part of the estate that wasn't included in your IHT calculations.

What you need to do before final distribution is complete the estate accounts, calculating all assets and all debts, with the difference being the amount that you need to distribute. You can't do this in full until you have collected all the money that's due, which can take quite a while if there's a property to sell. What I did with my mum was to obtain all the cash in the estate and make an interim distribution using the percentages specified in the will, then once her house is sold I'll finalise the accounts and distribute the balance.

BooJewels · 24 January at 1:39PM

I'd concur with @SiliconChip - I'm just finalising an estate and the whilst there's only my sister and I, both as executors and beneficiaries, the funds we'll end up with have no bearing on the numbers on the Grant - for a multitude of reasons. The house sold for more than valued at for Probate, so CGT now to pay and we've funded the house for a year since filling in the probate forms (utilities, insurance, gardener etc etc), paid for clearance (and storage in order to expedite a sale), but sold a few things too, had some refunds etc.

So you make up accounts at the end, your opening balance is what was there at the time of death - then money in, money out and what's left when everything is settled is what you divvy up. Beneficiaries may well ask to see accounts, so you need to write them up anyway.

weezie7 · 25 January at 4:02PM

Okay, that sounds clear. It doesn't seem quite right that some of the things will be valued at the date of death (a life insurance policy) and then things like PB winnings count even though they were not 'won' at the date of death! Seems a bit irregular, but if that is how it is, so be it.

BooJewels · 25 January at 4:30PM

Yes, but the PBs were owned by the estate of the deceased, so any gain to that 'account' is part of the estate too - same as interest on savings, items sold etc. Same as any legitimate expenses incurred are also borne by the estate - like insuring a property, house clearance, legal fees. There's often a difference between the value at death and what they turn into as hard cash - because it's the latter that you distribute to beneficiaries. The numbers on a Probate application are a best guess at the time really - largely to ascertain if any tax needs to be paid. Any fluctuations are accounted for in your final estate accounts - and increases may still attract tax (CGT).

See page 16 of this Age Concern leaflet for a summary of the final accounting if you don't believe us - or take legal advice:
https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs14_dealing_with_an_estate_fcs.pdf

getmore4less · 25 January at 5:04PM

Depends on the wording of the will and potentially who is entitled to any income of the estate.

PB wins after DOD are tax free estate income for upto one year.

SiliconChip · 25 January at 6:03PM

weezie7 said:

...and then things like PB winnings count even though they were not 'won' at the date of death! Seems a bit irregular, but if that is how it is, so be it.

But the only sensible alternative for something like PBs would be for NS&I to freeze the holding at the date of death and withdraw the bonds from future draws, so the beneficiaries could be losing out on £1,000,000!

weezie7 · 25 January at 6:24PM

Okay thanks for all the info. Will cash in the PB and the winnings and put into the estate. Thank you.

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Net or Gross Probate and Premium bond winnings

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