We were was planning to apply for probate for my FIL estate ourselves. His whole estate will go to my MIL so I understand no IHT will need to be paid. I estimate his estate to be about £400,000 including his share of the property and savings. He recently inherited some money from his brother and gave both my DH and DSIL £40,000 each would IHT need to be paid on those gifts? I am thinking if yes it might be easier to use a solicitor. Thanks for any advice.
As I understand it, when there is IH to pay, it is levied at 40% on gifts made less than 3 years before a person dies. This inherited money is included in the estate for IH and the difference between the untaxed allowance and the total estate is liable to tax. However, if he only has one property, provided it is in joint names, the whole of it goes to his wife without tax being liable. So what share does he have of a property? You may not need to worry about the property at all. I think you just need to worry about individual savings and the gifts. This may not exceed the allowance.
I think it is always easier to use a solicitor unless you are up to speed with this sort of thing.
Thanks again for advice. Definitely decided to go with a solicitor but I have one (lengthy) question about property that might help me understand. Say my FIL had cash assets of £250,000 and the one property as joint tenants with his wife. The house is worth about £300,000 so his share of property is £150,000. Therefore his estate is £400,000? Is that correct or would I not need to include the house as an asset as it would automatically pass to his wife. Tried googling to not much success. I would theneed to add the £80,000 given as gifts that would total his assets as £480,000 less £325,000 (IHT threshold) = £155,000 liable for IHT at 40%. Gosh it is confusing 😳😬. Still don’t think I have it right though.
You're right that it's the bit over the allowance that is liable for tax. It's a while since we dealt with the forms but there was a separate section for gifts from what I remember.
If the house automatically goes to your MIL and the assets do as well, it might be that the estate will only have to pay anything due on the gifts - you can call the helpline for advice. I'm not an expert, we've dealt with it ourselves and it was hard work tbh.