Inheritance tax bill/probate query - help!

kmeast · 26 April 2011 at 2:42PM

My father died last year & in his will left his share of the house to me & my siblings - but it has been put in 'trust' so that his wife is entitled to remain in the house until she dies & then be sold & the money shared out.

I have had a phone call today to advise that I will be receiving an inheritance tax bill of approx £12k for my share of the house!!

My question is can I put off paying this? or even pay in very small installments? (I am a single parent & only working part time at the moment so do not have access to this kind of money).

I'm sure dad thought when making his will that we would only have to pay inheritance tax when we actually receive the money from the house sale on the death of my step-mum. (which is probably 20 odd years off!!)

sorry if this is in the wrong place - but wasn't sure where to post!:(

gratefulforhelp_2 · 26 April 2011 at 3:05PM

Who did the call come from? IHT is only payable on the amount over £325k as I understand it.

kmeast · 26 April 2011 at 3:15PM

gratefulforhelp wrote: »

Who did the call come from? IHT is only payable on the amount over £325k as I understand it.

The call came from by step-mum who said she had been speaking to the probate solicitor. I believe the house has been valued at £350k.

RAS · 26 April 2011 at 3:20PM

Did your father leave any other assets?

kmeast · 26 April 2011 at 3:27PM

RAS wrote: »

Did your father leave any other assets?

He left some money for each of his granchildren (7 including step grand kids) of several thousand each (not sure of figures as still going through probate & it was a bond to be split 7 ways).

The rest I guess has gone to my step-mum, but i have no idea what or how much. I presume just contents of bank & savings accounts & contents within the house.

thorsoak · 26 April 2011 at 3:31PM

Inheritance tax has to be paid BEFORE any legacies are paid out - and it is paid out of the estate. The solicitor who is dealing with the probate should deal with it - not the residuary legatees.

daska · 26 April 2011 at 4:04PM

As thorsoak says, the solicitor should be contacting you about this, not just that but you are entitled to know how that figure has been reached. My understanding is that the tax is due from the estate before the legacies are paid and assets are divided (must state here that I'm NOT a solicitor, just had too much exposure to things going wrong LOL). Is it possible that your step-mum resents the possibility of her share being reduced?

kmeast · 26 April 2011 at 4:22PM

Thanks for the replies.

I think the problem is that the house is in 'trust' so cannnot be sold. I will now own 1/6th of it, so apparently I have to pay inheritance tax on that share even though I cannot sell it even if I want to!

I do wonder whether I am only being told the bits I 'need' to know though - if you know what I mean! I think I will need to see the figures to see how they come to this - I assume the solicitor will not just send a letter saying 12K please without this?

RAS · 26 April 2011 at 4:29PM

The solicitor has to pay the IHT before the estate can be settled and he can do this by using money in other accounts, which would not be permissible for you and me.

The remainder of the estate is carved up in line with the will.

If you have any doubts, ask to speak to the solicitor, but minimise contact as the other thing that gets paid before the estate is disbursed is the lawyer's fees.

thorsoak · 26 April 2011 at 4:38PM

kmeast wrote: »

Thanks for the replies.

I think the problem is that the house is in 'trust' so cannnot be sold. I will now own 1/6th of it, so apparently I have to pay inheritance tax on that share even though I cannot sell it even if I want to!

I do wonder whether I am only being told the bits I 'need' to know though - if you know what I mean! I think I will need to see the figures to see how they come to this - I assume the solicitor will not just send a letter saying 12K please without this?

If it is the value of the house that brings the estate into IHT values, then, in order to pay the IHT, it and any other assets in the estate - bank accounts, shares etc - may have to be liquidated, and then the bequests made before the residuary beneficiaries get their cuts. IHT, solicitors fees, costs of the funeral and any debts owed by your father at the time of his death have to be paid out first.

Although the house may be "in trust", it is the value of the house that is the relevant point here. The inheritance tax has to be paid BY THE ESTATE OF YOUR LATE FATHER in one form or another

daska · 26 April 2011 at 4:48PM

I believe it is possible for a will to stipulate that the people inheriting pay the relevant IHT, but it would be bit unfair of your dad to do this to you if he's not given you the right to realise the value of the asset. Could it be that your step-mum was shocked when the solicitor informed her of the IHT bill and said "well the kids are going to inherit it, can't they pay it" and the solicitor said "well, you could ask them"...

Inheritance tax bill/probate query - help!

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