Inheritance Tax forms/ probate forms

[NotGeoffVader]

I am wondering if there is any kind MN-er who can help me out with a few questions.
I'm a full-time student and have just completed my final year (hence very busy and stressful few months sitting exams, writing dissertation etc.), and am shortly to return to do a masters.

My father died in April and I am trying to make sense of the myriad questions on the forms relating to inheritance tax and probate. I've been putting it off, to be honest, but I know I need to get it sorted out.

I am hoping that with a little feedback from someone knowledgeable here, I can get these sorted out over the next few days.

My first question relates to IHT schedules. The question asks if I wish to deduct debts/liabilities from the estate. I can't see that the question specifically mentions outstanding monies on a mortgage, but I do want what remains of that debt/liability to be deducted.

There are two problems around this:

1. My father never changed the name on the mortgage after my mother died in 2000. (I have sent copies of the relevant documentation to the mortgage company and they are now aware of this fact).
   

1. I know that they had an interest-only mortgage, but I can find no documentation to suggest that there was a life insurance policy to cover this. I cannot afford to pay the mortgage, and intend to sell the property as soon as we have emptied it, and have probate sorted.
   

I am assuming that in relation to (1) above, this means that the Zero Rate Band that applied to my mother's "half" of the property applies.
Does this mean I should be saying that he did have 'shared assets' with another person?


I would go to the CAB but at the moment I don't have any babysitting in place and can't take a fidgety, shouty, tantrummy 19 month old with me to an interview there.

[betterwhenthesunshines]

Not an expert, but we have just been to see someone about our own wills.

If you're asking if your mother's handover to your father is still allowed for a zero rated as he is now passing on his estate, then I think the the answer is No.

When your mother died, her portion of the asset would presumably have gone to him, zero rated, as her spouse. At that point it become part of his estate. He can't have shared assets with someone who is deceased.

His estate needs to be valued so:
value of house minus liabilities (ie the mortgage) If they have been paying interest only, then the capital sum that is due needs to be accounted for.

The amount left is then part of his estate. £325k of this can be passed on zero rated. The rest you need to pay Inheritance on.

So if the house is valued at £600k but the capital repayment due is £400k then that leaves an asset of £200k so no tax would be due (as long as there were no other assets)

If the house is valued at £600k, but the capital repayment due is £200k then that leaves an asset of £400k. so assuming no other assets you would need to pay IT on £75k. So 40% of £75k is £30k bill.

At least, that is how I understand it, but as I say, not an expert. Good luck, it is time consuming and complicated. Is it worth getting a quote from a local solicitor who can work it all out for you?

[NotGeoffVader]

I did ask a local solicitor, better but they wanted £2,500. I simply can't afford it...

Think I will have to find a day when DH can have DD and go to the CAB or write a cover letter saying I have filled out the forms to the best of my ability.

I don't think my Dad claimed anything to do with IHT in respect of my mother - seeing as he hadn't even changed the mortgage details...

Thanks for your feedback though, it's very helpful.

[betterwhenthesunshines]

I don't think he would have had to pay any IHT as her estate would have passed to him automatically.

But anything that was 'hers' is now 'his'. So her allowance is irrelevant now anyway. It's all about his estate ongoing.

YOu can always pay the solicitor bill out of the estate. I would have thought they would allow deferred payment until it was all settled.

[IamtheZombie]

If the whole of you DM's estate passed to your DF under the spousal exemption then you CAN transfer her estate's IHT exemption to use against your DF's estate. Or, if she left specific legacies totalling say £25K to other people and the rest of her estate passed to your DF, you can transfer the unused portion of the IHT exemption.

[betterwhenthesunshines]

Just shows what I know!

[IamtheZombie]

I recently completed all the probate paperwork for DZH's mum's estate, better. His dad died in 2006 and everything passed to his mum under the spousal exemption. Her estate was just over the single IHT exemption limit and I was able to transfer his unused exemption to apply against her estate. That's how I know about it.

[NotGeoffVader]

That's the problem, Iam - neither parent left a will. I will have to look through the one bag of paperwork that is still there - although as far as I know, it is all house plans and mortgage paperwork.
There is a reasonably small mortgage to pay off, and that's it. No shares, no assets, no jewellery, no cars, nothing else of value whatsoever.