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  • FIRST POST
    • Newcomer1234
    • By Newcomer1234 10th Nov 18, 10:26 PM
    • 10Posts
    • 8Thanks
    Newcomer1234
    Transfers to Spouse on Death
    • #1
    • 10th Nov 18, 10:26 PM
    Transfers to Spouse on Death 10th Nov 18 at 10:26 PM
    Hi

    Please can somebody more knowledgeable help me?
    Dad has just died. Stepmum, brother and I are the Executors. We are agreed I should try to resolve the IHT and Probate issues rather than buying a solicitor a new car.

    The estate is borderline for IHT (depends on the final values for some of the bits)

    Looking at the IHT forms on HMRC's website I can't see how to show that my stepmum is going to get 25% of the pot, but I thought that transfers to a spouse were exempt from IHT....and it could make a big difference to the tax paid.

    Obviously these are not my numbers, just an example.

    Dad left 350,000 in the bank. Nothing else. IHT allowance 325,000
    Putting the figures on the form it looks like we would pay tax on 25,000

    But if 25% goes to stepmum and is exempt should it be 350,000 less 87,500, (her 25%) which would mean none is payable?

    Obviously I am being really thick here so please be gentle with me!



    Thanks in advance
Page 1
    • Misslayed
    • By Misslayed 10th Nov 18, 10:31 PM
    • 5,054 Posts
    • 26,151 Thanks
    Misslayed
    • #2
    • 10th Nov 18, 10:31 PM
    • #2
    • 10th Nov 18, 10:31 PM
    It's a few years since we had to deal with a similar situation, we found the people at the probate helpline were very knowledgeable, helpful and patient, they talked us through the trickier bits of the forms. Worth a call.
    Hi. Martin has asked me to tell you I'm a (novice) Board Guide on the Competitions, Site Feedback and Campaigns boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with abuse). Any views are mine and not the official line of MoneySavingExpert.com.
    • Newcomer1234
    • By Newcomer1234 10th Nov 18, 10:44 PM
    • 10 Posts
    • 8 Thanks
    Newcomer1234
    • #3
    • 10th Nov 18, 10:44 PM
    • #3
    • 10th Nov 18, 10:44 PM
    Hi and thanks for replying.
    Stepmum called Probate office for help on a different issue and found local office really helpful.

    But, I thought I had to complete the IHT forms first - and cough up the tax before I went to the probate office. Did I misunderstand this?

    I really don't want to pay a solicitor to do this because although there is a fair bit of money in the pot - its all in the bank and should be really easy to sort as the will is really clear and simple.
    • Keep pedalling
    • By Keep pedalling 10th Nov 18, 11:17 PM
    • 5,624 Posts
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    Keep pedalling
    • #4
    • 10th Nov 18, 11:17 PM
    • #4
    • 10th Nov 18, 11:17 PM
    Based on you figures there will be no IHT to pay. Everything left to a spouse is exempt and as the remainder is under his nil rate band the IHT liability is zero.

    As the estate is cash only it should be simple to administer and you should not need to employ a solicitor. When you work through form IHT205 you will see that provided the gross estate less any bequests to a spouse or charity is below the nil rate band then you are OK.

    Do not forget to account for any gifts above the annual 3000 allowance that he may have given in the past 7 years.
    • Tom99
    • By Tom99 11th Nov 18, 1:56 AM
    • 3,025 Posts
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    Tom99
    • #5
    • 11th Nov 18, 1:56 AM
    • #5
    • 11th Nov 18, 1:56 AM
    Fill in form IHT205 as follows, fill in the .PDF form on your computer:

    Page 4 11.1 Cash in Bank = 350,000
    Page 5 Boxes D,F,G&H Gross Value for Grant etc = 350,000 will automatically populate.
    Page 7 Box J Amount to spouse = 87,500
    Page 7 Box K net qualifying value = 262,500 will automatically populate.

    Its only 11.1 and Box J you need to fill in all the other figures will automatically be filled in for you.
    Last edited by Tom99; 11-11-2018 at 8:18 AM.
    • badger09
    • By badger09 11th Nov 18, 11:39 AM
    • 6,393 Posts
    • 5,802 Thanks
    badger09
    • #6
    • 11th Nov 18, 11:39 AM
    • #6
    • 11th Nov 18, 11:39 AM
    Hi

    Please can somebody more knowledgeable help me?
    Dad has just died. Stepmum, brother and I are the Executors. We are agreed I should try to resolve the IHT and Probate issues rather than buying a solicitor a new car.

    The estate is borderline for IHT (depends on the final values for some of the bits)

    Looking at the IHT forms on HMRC's website I can't see how to show that my stepmum is going to get 25% of the pot, but I thought that transfers to a spouse were exempt from IHT....and it could make a big difference to the tax paid.

    Obviously these are not my numbers, just an example.

    Dad left 350,000 in the bank. Nothing else. IHT allowance 325,000
    Putting the figures on the form it looks like we would pay tax on 25,000

    But if 25% goes to stepmum and is exempt should it be 350,000 less 87,500, (her 25%) which would mean none is payable?

    Obviously I am being really thick here so please be gentle with me!



    Thanks in advance
    Originally posted by Newcomer1234
    Condolences on your loss.

    Sorry, but if there are 'bits' to be valued, then why do you say 'nothing else'? It would be an unusual situation to have 350k in cash savings and nothing else.

    Was there no house/flat? Car?
    • Owain Moneysaver
    • By Owain Moneysaver 11th Nov 18, 12:38 PM
    • 8,844 Posts
    • 10,176 Thanks
    Owain Moneysaver
    • #7
    • 11th Nov 18, 12:38 PM
    • #7
    • 11th Nov 18, 12:38 PM
    Those were example figures, not the actual ones.

    The relevant helpline is HMRC Inheritance Tax and Probate, not the Probate Registry

    Telephone:
    0300 123 1072

    Outside UK:
    +44 300 123 1072

    Opening times:
    Monday to Friday: 9am to 5pm
    A kind word lasts a minute, a skelped erse is sair for a day.
    • Newcomer1234
    • By Newcomer1234 11th Nov 18, 10:37 PM
    • 10 Posts
    • 8 Thanks
    Newcomer1234
    • #8
    • 11th Nov 18, 10:37 PM
    • #8
    • 11th Nov 18, 10:37 PM
    Hi
    Sorry if I confused things.
    His assets are a few shares, very healthy bank balance, NS and I bonds and a few premium bonds. Some will have to be valued as of day before he died but we have a pretty good idea how much.

    He sold his house and moved in with step mum. Didn't have his own car (shouldn't have been driving anyway!). Nothing else of any value.
    • Tom99
    • By Tom99 11th Nov 18, 11:10 PM
    • 3,025 Posts
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    Tom99
    • #9
    • 11th Nov 18, 11:10 PM
    • #9
    • 11th Nov 18, 11:10 PM
    On IHT205 Box 11.1 for bank balance, NS&I bonds and premium bonds.
    Box 11.3 for shares. Remember to add the dividend due for any which were ex-div but not yet paid.
    • nom de plume
    • By nom de plume 12th Nov 18, 8:15 AM
    • 760 Posts
    • 696 Thanks
    nom de plume
    Just to digress slightly...


    If the relationship with stepmum is sound, could the other beneficiaries use a DOV to leave the whole estate to her to avoid any IHT and she then simply gifts the other legacies in the hope of surviving at least another 7 years? Too simple or am I missing something?
    • Tom99
    • By Tom99 12th Nov 18, 8:56 AM
    • 3,025 Posts
    • 2,071 Thanks
    Tom99
    Just to digress slightly...
    If the relationship with stepmum is sound, could the other beneficiaries use a DOV to leave the whole estate to her to avoid any IHT and she then simply gifts the other legacies in the hope of surviving at least another 7 years? Too simple or am I missing something?
    Originally posted by nom de plume

    Using the OP's figure there will be no IHT to pay but, if there was, your suggestion will work and the surviving spouse will inherit another 325k nil rate band and the eventual 175k residential nil rate band.
    • Owain Moneysaver
    • By Owain Moneysaver 12th Nov 18, 9:02 AM
    • 8,844 Posts
    • 10,176 Thanks
    Owain Moneysaver
    If the relationship with stepmum is sound, could the other beneficiaries use a DOV to leave the whole estate to her to avoid any IHT and she then simply gifts the other legacies in the hope of surviving at least another 7 years? Too simple or am I missing something?
    Originally posted by nom de plume
    Stepmum might change her mind. People sometimes do when money's involved.

    Stepmum might need the money for care fees (deprivation of capital), be made bankrupt, spend it all on scratchcards, etc.
    A kind word lasts a minute, a skelped erse is sair for a day.
    • nom de plume
    • By nom de plume 12th Nov 18, 9:14 AM
    • 760 Posts
    • 696 Thanks
    nom de plume
    Using the OP's figure there will be no IHT to pay but, if there was, your suggestion will work and the surviving spouse will inherit another 325k nil rate band and the eventual 175k residential nil rate band.
    Originally posted by Tom99

    I totally overlooked the fact that there's no IHT due. My bad.

    Worth a look at though perhaps for the bigger picture as you suggest.
    • getmore4less
    • By getmore4less 12th Nov 18, 9:34 AM
    • 33,479 Posts
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    getmore4less
    Was there a previous wife, if there was divorce or deceased?
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