An elderly aunt passed away recently without a will.
Single, no kids and lived with a friend for all her adult life. The house was in the friends name but all bills etc. were paid from a joint account.
My dad is managing the estate which will be split between him and his other sister.
He has been told there is the potential that as she contributed to the home, then the estate will be due a proportion of the value of the house. To do this the friend would need to sell the house or get a considerable mortgage to pay the share.
He is happy not to receive anything from the house and has no intention of seeing the friend put in to difficulties, but is concerned that the other sister who wants everything possible could complain that the estate wasn't split properly.
Also, without the proportion of the house the estate is under £325k, with a 1/4 of the house value it is considerably over £325k. Will inheritance tax be payable even if the house is not included?
I suggest handing the whole thing over to a solicitor to resolve. Any advice / pointers / tips welcome!
Last edited by: Driver on Fri 3 Aug 18 at 12:30
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My first thought is he needs legal advice.
Given size of estate I think the 'hand it all to a solicitor' suggestion has considerable merit.
Alternatively he might see whether his local CAB has 'pro bono*' solicitor who can help. This will though be limited to 20-30mins of top level bullet point type stuff.
*Pro bono publico - for the public benefit. Shorthand legalese term for advice given free of charge.
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Professional and competent legal advice, without doubt. Just choose carefully and be sure to be very clear to the solicitor what the issue is and what you would like to be the outcome.
There is no way he should do this without. If nothing else he will need to wave a piece of paper to control the other sister.
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Inheritance issues do seem to bring out the worst in some people.
Totally agree get a solicitor involved not necessarily to do the whole thing but to advise on the legalities.
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Completely agree.
"The house was in the friend's name" might open up a can of worms. What does it mean?
She was the legal owner?
She was the beneficial owner?
She had a life interest?
She contributed a capital sum to its purchase and was "on the deeds" ?
She had paid the mortgage?
A proportion of any of these?
Etc
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>> Completely agree.
>> "The house was in the friend's name" might open up a can of worms. What
>> does it mean?
>> She was the legal owner?
>> She was the beneficial owner?
>> She had a life interest?
>> She contributed a capital sum to its purchase and was "on the deeds" ?
>> She had paid the mortgage?
>> A proportion of any of these?
Could be any of those things and one would want to confirm as part of exploration of circs. One would however start from point that 'friend' was legal owner and assumed to be beneficial owner but that beneficial interest might also be asserted for the deceased based on her contributions to household over many years.
Don't recall having come across this precise situation. You wont work for long in an advice agency though without encountering somebody, usually a woman, asserting beneficial interest after relationship breakdown. It's not as straightforward as 'friends' think but in a long term relationship with joint bank accounts etc it's a real possibility.
Last edited by: Bromptonaut on Fri 3 Aug 18 at 15:01
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Definitely involve a solicitor at some level, although plenty of footwork can be done by your father to reduce a large invoice further down the line.
Last year I involved a solicitor and did most of the legwork myself, but there was an avaricious IFA in the background and a Solicitors letter sorted that can of worms.
And in the future there is a similar situation probably pending, but face to face with the same highly efficient solicitor this week has pre empted any such unpleasantness should it raise its ugly head.
Don’t know where you are located, but the solicitor I use, and recommend, is Bradford/Bingley based.
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Far too complex and specific problem for generic advice from here, a pro needs to be engaged. Make sure the sister knows she is the cause of an extra cost on the estate.
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As other have said, complex.
What I'm reading is:
Aunt has died Intestate
Aunts friend appears to be the 'owner' as its in her name.
Friend and 'owner' of property is still alive.
Father of poster and particularly sister are expecting a share of proceeds.
Last edited by: Fullchat on Fri 3 Aug 18 at 17:19
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>> As other have said, complex.
>>
>> What I'm reading is:
>>
>> Aunt has died Intestate
Yes
>> Aunts friend appears to be the 'owner' as its in her name.
Probably - we don't know for sure.
>> Friend and 'owner' of property is still alive.
Very much so for much longer we hope.
>> Father of poster and particularly sister are expecting a share of proceeds.
Actually no. Father had no interest in the cash element of the estate. Friend passed over all the bank, ISA, premium bond accounts and said "take them, it's only fair".
Friend of deceased aunt has a decent pension and is comfortably off. Pension benefits assigned to the friend.
Father is comfortable in retirement and wants for nothing, so money isn't an issue luckily.
Living aunt is not actually "grasping" but her spouse has been asking too many probing questions about other assets and what interest deceased aunt had in the house, making it clear that if there is a share then it they are expecting it.
Apart from paying in to a joint account for 50+ years father don't know any more details but strongly suspect that aunt is not on the deeds.
Father certainly doesn't want to cause any family rift and certainly doesn't want to cause friend any financial difficulties at this stage of their life. What is more father totally expects the house to go in full to friend's siblings when the time comes and has no interest in it what so ever.
He is concerned at any action that could follow against him if assets are not split as the law expects - like the house. His sister is frail and therefore if she passes before the estate is settled then her spouse may get aggressive re the split that was due to her.
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>> strongly suspect that aunt is not on the deeds.
You can check that for a small fee yourself can't you? No need for a solicitor for that. If her name is not on the deeds does it mean she has no claim at all though?
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>> >> strongly suspect that aunt is not on the deeds.
>>
>> You can check that for a small fee yourself can't you? No need for a
>> solicitor for that. If her name is not on the deeds does it mean she
>> has no claim at all though?
>>
Actually didn't know that. Thanks.
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Another reason for legal advice is consequences of it turning out aunt had a beneficial interest in the jointly occupied property.
If aunt had a clear legal and beneficial interest then, had she made a will, it could have provided for a life interest, or other device, to protect friend's right to remain in their home. AIUI it's still possible to retrospectively re-write a will (or intestacy) via what's known as a deed of family arrangement which would protect friend during her lifetime.
Legal advice will expand on this.
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hmlandregistry.blog.gov.uk/2018/02/05/search-owner-unregistered-land/
Assuming the title is registered, but it is very unlikely not to be.
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I've used this a couple of times - one when step-son was buying a property and when we were once in the process of buying somewhere.
Last edited by: rtj70 on Fri 3 Aug 18 at 20:58
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Lesson here folks, if you have any assets and your living arrangements are anything other than "conventional" (i.e. married, civil partnership) make a Will. Although making a Will in certain circumstances can lead to unexpected complications. If you are making a Will get one written by someone competent or there may be some unexpected outcomes. Update your will regularly to reflect any life changes.
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I cringed at one: The will had been written by the deceased on a form purchased from a High Street Newsagent (remember them ?). He left the house he was living in to a relative - he specified the address, sold it a few years later and moved on...
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THe only thing that I can add to some excellent posts is that there are a hell of a lot of useless solicitors out there. I have faith in LL and I see no reason why you would have to be close to his brief to use him. Might be worth one face to face meeting with him then Internet my friend.
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I made my first will when I bought my first house, aged 22. I was participating in all kind of what some might consider ‘ dangerous’ sports....caving, rock climbing, Alpine climbing up pointy snow covered peaks so thought it a good idea, and I’ve revisited my will every 5 years or so.
A long time friend, a partner in a law firm whose speciality lies elsewhere, directed me to a colleague who specialises in Wills and Probate. Even though I like to think I’m pretty switched on with this stuff, her advice opened my eyes, and I took it gratefully.
Obviously the value of one’s estate changes constantly, so after leaving smaller numerical financial legacies to lots of small local charities, the rest has been divided up and apportioned percentage wise ( of the remaining estate) to the larger beneficiaries.
I’ve no children so The bulk is going to charity, and smaller amounts to a few close friends. The solicitor advising both myself and my 92yo mother suggested my Mom leave a hand written note explaining why certain family members were getting zilch, and why others were to receive larger bequests. My mom had a face to face with the solicitor explain8ng her reasons, and wrote the letter in her presence so was under no duress. I’m not saying it’s a large estate, and doubt that with recent regulatory changes that any IHT will be payable, but at least it stops the magpies in their tracks!
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RP, Agreed but even a conventional arrangement has potential pitfalls if there is no will. For example partners don't automatically inherit 100% if the estate is over £250k and there are children. The kids get a share. This may or not be what the deceased would have wanted.
While its too late in this case, a proper will is a wise investment and is one of the better value legal services.
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My first wife died without a will (didn't think we'd need one - you know what it's like) - it worked out ok for me. Lack of Letters of Administration was one issue (certainly with one Insurance Policy)...I wouldn't want anyone in my family circle to get caught out again, a simple mirror will resolves a lot of potential problems. My personal affairs are far more complex than they were 10 years ago.
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This is a stark tale of warning about the perils of not getting married.
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"This is a stark tale of warning about the perils of not getting married."
I am sure that those who have been multi-married would tell even more problematic financial tales of woe.
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>> "This is a stark tale of warning about the perils of not getting married."
>>
>> I am sure that those who have been multi-married would tell even more problematic financial
>> tales of woe.
I didn't think I needed to add that divorce is not a good option financially.
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I would like to thank everyone for their contribution.
Father will make an appointment with a solicitors this week.
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>>I suggest handing the whole thing over to a solicitor to resolve. Any advice / pointers / tips welcome!
I suggest handing over the house bit to resolve - or at least taking advice on that point - but quite possibly not the rest of the estate. The solicitors will charge you x% of the value of the estate (which is probably mostly in cash and a couple of anyway so really won't be painful to sort out).
Assuming there is an argument that the house is, beneficially, jointly owned, then the next step will be to work out whether as tenants in common, or as joint tenants. Under the first scenario the deceased's share of the house is available to be shared out according to their will; under the second scenario the deceased's share of the house would pass automatically to the 'adult friend'.
>>Also, without the proportion of the house the estate is under £325k, with a 1/4 of the house
>>value it is considerably over £325k. Will inheritance tax be payable even if the house is not
>>included?
Assuming that the share of house plus other assets exceeds £325k then IHT will be payable by the estate, even if the house is 'not included'. However, what do you mean by 'not included'?
Option 1. The solicitor concludes that aunt had nothing to do with the house.
Option 2. The solicitor concludes that aunt had a share in the house but:
(a) Your father and aunt decide that 'adult friend' may live there for the rest of life but they receive the cash when the house is sold (get a 'charge' put over the house - i.e. the same rights as the bank has when you take out a mortgage); or
(b) Your father and aunt decide to give balance of house to 'adult friend'; or
(c) Your father and aunt decide to sell the house to realise the cash.
Under all circumstances within 2 then IHT is due in respect of the extent to which all assets exceed the £325k.
If you decide to follow (b) then you might need to execute a deed of variation (what was referred to upthread as a 'deed of family arrangement' but they don't have to be within families) so that it is deemed to have come directly from deceased's estate directly to 'adult friend' - rather than going through the estate of aunt and father, which might give rise to further IHT if they die within seven years.
So be aware that following (b) does not give the same IHT result as option 1. If the solicitor decides it is a grey area then option 1 may give a better IHT result.
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Just a small update...
A local firm of solicitors is now dealing with this for a reasonable set of listed fees and an overall cap of £800 which is not expected to be reached. Sols thinks about £600 would be the ball park, (disbursements and VAT to be added).
General view is nothing will come of the house (good) but obviously deeds & bank accounts will need reviewing.
Dad is doing / has done the leg work and the solicitor said that will save a significant amount.
They went to one high street bank with a copy of the death certificate to close an account (balance less than the banks rule for requiring probate).
The bank insisted on sending their "probate advisor" around.
A woman turned up in the evening and saw that they had done most of the work and said they charged £3,500+VAT +Disbursements for simple estates!
This is a division of a well known friendly society!
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All points to the wisdom of the injunction "Die Tidy!" A will is essential but there are many other details that the bereaved will have to tackle and which should be put in a document for them.
This reminds me to check my own 8-paged version but can anyone who has been through the hoop recommend a "What to do When Someone Dies" guide? Which? had one but I believe it is out of date. The one on Government Gateway is very basic.
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Do as I did ambo. Get your name on the Porsche waiting list as soon as you get sight of the Will if there’s a decent legacy ( pun)
I know that’s tongue in cheek, but you did ask....
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Our wills are being updated, minor tweaks that's all, also going to do an LPA - these can be done online.
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I'm sure you know you need two lpa's, one for health, one for wealth.
Did mine recently. There is a lot of signing etc for your witness to do and they picked up that the witness had a wrong date in one signature, and sent it back. I had to do most of it again but not all. When it went back again they found a mistake in my bit of it (which they'd previously seen) and I had to do the whole thing again, and pay again.
So be sure to check it all carefully before sending it off!
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LPA dead easy to do online.
>>I'm sure you know you need two lpa's, one for health, one for wealth.
The health one is only necessary if your close family are going to disagree over future treatment if you are incapacitated (or if you're going to disagree with their likely course of action and wish to appoint somebody else). This way you get to decide who gets to make the decision.
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I am at the point of making initial enquiries about new wills for both of us.
I had a brochure through the post from a firm called April King Legal who claim to be experts in property trust (and bloodline) wills, the idea of the former being to protect, or partially protect, one's assets - our house mainly, against possible future care home fee expropriation.
We have simple mirror wills currently, but these were a good while ago now and family circumstances have changed.
I may well ask for a (free) consultation a cost quote from this firm and possibly also one from the solicitors who handled our house purchase. I also see that Co-Op legal services offer such services.
We also intend to get LPAs although the cost of a professional service seems high when it can be done oneself, online, at a government official site.
Any thoughts?
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>> We also intend to get LPAs although the cost of a professional service seems high when it can
>> be done oneself, online, at a government official site.
Indeed very easy to do. And it prints out from the generated PDF for you then all to sign. You could download the forms and fill-in by hand but we found it easier to do online.
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I would like to ask a question. I am seeking to execute probate for my wife's estate. She recently passed on. The WILL is very clear, I am the chosen person to do the probate and all her worldly goods come to me. We are tenants in common.
So tax will be due on 50% of the house value plus the cash in her bank, when that exceeds £325k.
To even start the process of going for Probate, I have to show what that combined sum will be and "pay a substantial amount of the tax due" before I can go for probate. So says a gov site.
How simple can the submitted A/C's be? I have a bank printout of all the A/C numbers, except one, and the money in each account, all on one A4. It would be nice to use just that plus the odd one.
Add them up. Or are they expecting A/Cs in detail? (I am not an accountant).
Anyone already done this.
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>> So tax will be due on 50% of the house value plus the cash in
>> her bank, when that exceeds £325k.
Hold on. IHT threshold is doubled when passed from Wife to Husband.
The current inheritance tax (IHT) threshold is £325,000 per person. It doubles to £650,000 for a married couple - as long as the first person to die leaves their entire estate to their partner.
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I thought assets passing between spouses were exempt IHT but after indulging in Aldi's offer of Grimbergen Blonde at £1.29 per 330cl bottle my judgement may be impaired.
Will try again in morning.
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Not exempt, but the threshold is doubled.
Ooo cheap grimbergen.......
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>>Not exempt, but the threshold is doubled.
No, I though that was how it was retrospectively calculated on the death of the second spouse?
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>> The current inheritance tax (IHT) threshold is £325,000 per person. It doubles to £650,000
>> for a married couple - as long as the first person to die leaves their
>> entire estate to their partner.
I think you've misunderstood that. Any transfer husband>wife and vv won't incur IHT
The doubling means a married couple who die together have a combined limit of £650k. Allowance which is unused of first death can be carried forward to second. So when my Father died in 1996 not all his allowance was used. That portion could be used later after my Mother died in 2017.
By making full use of all allowances Mum's estate, which was well in excess of £325k, incurred no IHT,
Last edited by: Bromptonaut on Mon 17 Sep 18 at 20:59
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I know little about this, I thought that passing from one Spouse to the other was exempt? I thought the £325,000 applied if you left it to someone other than your spouse?
Am I totally wrong?
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Something rang a bell with me about a law change in 2017 (I think)...I know the Tories changed it - the closest reference I could find comes from Which..
The new transferable main residence allowance came into effect in April 2017 will increase the amount that can be passed on tax free by £125,000 per person in April 2018 to £175,000 per person by 2020/21.
This is in addition to the main nil-rate band. It will effectively raise the IHT-free allowance to £500,000 per person.
Where married couples jointly own a family home and want to leave this to their children, the total IHT exemption will be £1m.
If this allowance is transferred between spouses, the value of the transferred allowance will depend on when the second, not first, partner dies
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Married Couple or Civil Partnership
No matter how large an estate is £400K, £4m or £4Bn there is no inheritance tax to pay on assets / monies left to a spouse.
When the widow or widower passes on there will be IHT to pay on the whole estate less the 2 x exemption figure at that time.
You can avoid paying IHT on certain assets that are farming, woodlands etc etc - Hence the huge demand by the super wealthy to buy "land" - e.g. James Dyson springs to mind - he "hoovers up" estates all over the UK.
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Unless the first spouse died before the introduction of IHT Falkirk B as my late Father did. I think it was called ‘estate tax/duty’ then. My old mums been widowed 40 plus years.
We sat down with a specialist solicitor and did the math when we both recently made new wills. With her small estate there won’t be any IHT to pay. Neither will I, despite my non mortgaged property being 2x the value of hers.
It’s all going to charity!
And if you leave at least 10% of your estate to charity, then IHT is reduced to 36% rather than 40%.
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No IHT on passing of estate to second spouse on death of first spouse (in current times). Zero is completely wrong.
Provided both UK resident and domiciled; if not then it could be less simple.
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>> Zero is completely wrong.
Alas for you, I admitted that before you could get your not unexpected barb in.
Better luck next time.
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But you said, "Correct my mistake," so I did!
Last edited by: Mapmaker on Tue 18 Sep 18 at 11:14
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www.gov.uk/inheritance-tax
"Overview
Inheritance Tax is a tax on the estate (the property, money and possessions) of someone who’s died.
There’s normally no Inheritance Tax to pay if either:
the value of your estate is below the £325,000 threshold
you leave everything to your spouse or civil partner, a charity or a community amateur sports club"
What is not normal? Tenants in common ?
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Sorry. I am duplicating what RP said above.
Looks like |I wil lnow be able to use zero's first hot link to report estate wealth
Last edited by: busbee on Tue 18 Sep 18 at 11:45
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I think you will need to report the size of the estate and how, under the will, it is being dispersed so that HMRC can confirm IHT liability. As it's all going to you as a surviving spouse then, unless very substantial lifetime gifts were made in seven years before death, answer will be that there's no liability. The fact that you held property as tenants in common rather than joint tenants is academic.
AIUI from my Mother's estate the Revenue issue a formal stamped receipt confirming no IHT due and the Probate Office need to see that before issuing a Grant. If IHT is due then it, or at least a substantial proportion, needs to be paid before a Grant can be issued. This can be a problem for Executors who may need to borrow against the estate to meet the IHT.
If you're in any doubt or are worried about getting it right it would be worth speaking to a Solicitor. You don't necessarily need to pay them to do the legwork but 30-60 minutes of advice, confirmed in writing, should provide a guide as to what's needed and any potential traps. Try and find a recommendation rather sticking a pin in a list.
See also my post in response to thread OP about possibility of 'pro-bono' clinics at your local Citizens Advice.
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>> The fact
>> that you held property as tenants in common rather than joint tenants is academic.
>>
Not necessarily. The property share held by a tenant in common passes by will, to the survivor or whoever the will specifies. A share held by a joint tenant passes to the survivor (or whoever it is held jointly with) automatically, regardless of will.
Another "not normal" example might be if any share of the property is held in trust, eg for a survivor's lifetime. I have read that the additional descendant's allowance may be in doubt if that is the case, because it has to pass "directly".
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>> Not necessarily. The property share held by a tenant in common passes by will, to
>> the survivor or whoever the will specifies. A share held by a joint tenant passes
>> to the survivor (or whoever it is held jointly with) automatically, regardless of will.
In this case the will is stated to provide for everything to go to the husband so joint tenants/tenants in common makes no difference. I accept that if will left share in house to someone else circumstances would be different.
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www.gov.uk/inheritance-tax
I am having great difficulty in finding a route that supports this statement that the half passes without being taxed if we are married.
I tried Zero'd first one. It was soon telling me to switch to another routine, after I said it was going to be above 325k. Not asking me if I was getting the other half of the house. Just if it was part owned.
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>> www.gov.uk/inheritance-tax
The second bullet point at the top of that page is explicit. There is no Inheritance Tax to pay if you leave everything to your spouse or civil partner, a charity or a community amateur sports club.
How the forms work is another question as when Mum died the solicitor dealt with it.
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My understanding of the form IHT 205 is as follows:
After basic details you first list any joint assets that pass by survivorship. These would count for IHT but don't require a grant of probate. Questions 9.x cover assets, joint liabilities come out under questions 10.x ending up with a net figure in Box C.
The next questions 11.xx and 12.xx deal with assets and liabilities of the estate passing by will. Your late wife's assets, including her share of the house go here as do liabilities including funeral.
Eventually you'll end up at Boxes E,F,G&H summarising the portions of the Estate and Gross and Net Values.
In next section you declare the transfers to yourself as exempt passing to surviving spouse.
If you cokc it up then HMRC will return it with questions.
THIS IS NOT ADVICE. If you're in any doubt consult a professional.
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What do you need to do if the half of the estate belonging to the deceased is worth less than £325k? Sorry to hijack the thread.
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>> What do you need to do if the half of the estate belonging to the
>> deceased is worth less than £325k?
Not sure I understand your question. What do you mean by half an estate? And under what circumstances. But I think the answer is this:
www.gov.uk/money/personal-tax-inheritance-tax
"Use the online service (IHT205), or postal form and (IHT206) notes to help complete the form if the estate is unlikely to pay Inheritance Tax."
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Thanks Bromp.
I will have another go.
Mine went pear shape when I told it the house (half) would exceed 325k. It then asked if it was between that and 1 million. I said yes, and it then told me that IHT 205 was not for me, and I needed to switch to xxxx to continue and it would transfer what I had entered so far.
Up to that point I had not been asked if I was married and was getting everything was to come to me. I aborted.
It looks like the putting in the other IHT stuff first may work for me.
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Intestacy and Estates - Bromptonaut
