Probate, IHT, panicking a bit. Help.

[ElectiveAffinities]

I had a thread on here a few weeks ago asking about DIY probate and had lots of helpful replies. I hoped it was probably doable as there’s not much to wind up in the estate - literally just a house to report for probate (and DSis and I are pondering keeping it in the family anyway so possibly no open market sale to arrange).

We know we have up to £500,000 of IHT relief for DM, and our late DF had a nil-rate band trust in his will so in theory there shouldn’t be any issues (the property value, though unexpectedly well above what we imagined still shouldn't take us anywhere near paying IHT) but .....without going into details, I’ve had traumatic dealings with HMRC in the past and this is bringing it right back. I feel sick and anxious about it.

While still grieving my beloved DM, feeling very vulnerable and out of my depth, I’m terrified of getting it ‘wrong’ somehow with HMRC. I’m particularly worried about how DF’s nil-rate band trust works and how it’s reported to HMRC so his exemption is utilised. Every time I think about it there’s another question that seems hugely complicated and I just don’t know the answer.

The solicitor who handled my parents’ wills would need to be instructed by us before answering any questions and I don’t know whether they’d expect us to buy their off-the-shelf probate package (I’m still reluctant to pay £££ for this and feel out of control of the process and timing) - or would it be reasonable to expect them to respond to questions as they arise (which of course I’d expect to be billed for in whatever way they normally do)?

It all feels too much. I know I’m being a wuss but I’m getting myself in a state. Can someone wise and experienced calm me down a bit? Sorry for the long post

[PlanDeRaccordement]

I’m sorry for the loss of your DM. It can be overwhelming to handle the affairs while also grieving. I did pay a retainer to a solicitor to do probate for me when my DM passed away suddenly. Then I paid him an hourly rate for other things like questions as I managed and divided up her estate. I highly recommend not doing probate yourself. For me it was worth the £ and should be covered by your DMs estate, not your personal funds.

[CMOTDibbler]

It is overwhelming, but you can do it, and reporting the nil rate band and property disregard is OK - there is a form for each of them to fill in. The nil band is IHT 402, the property 435 and 436

Start with the IHT 400 form - theres a section which tells you all the forms you need, so just fill them out in turn and its honestly OK. I filled all mine out and ticked them off my list of required forms, and then got DH to just check them through for me so there was an independent eye.

Feel free to DM me if you want - I'm no expert, but having done probate twice this year at least I can lend a listening ear

[ElectiveAffinities]

Thank you to both, very good of you to reply.

CMOT, I'll take you up on your very kind offer, if you really don't mind.

[FoxtrotSkarloey]

I'm sorry for your loss. I can understand why you may not want to contact HMRC based on what you've said, but when I had questions relating to my DF's IHT they were very helpful and patient.

[FinallyHere]

I did probate for DF, who died first before DM, and used a solicitor to set up the (zero band) trust and property transfer. As CMOT says, probate is just a straightforward administrative task.

The hard bit can be pulling together contacts details (account numbers etc.) for all the organisations which need to be contacted. You might as well do that part yourself as you would need to tell the solicitor that information anyway.

Most organisations have bereavement lines which are very helpful and sympathetic. Very used to people who are doing this for the first time and very patient with queries.

Having got that information, you might as well write to them all, to send a copy of the death certificate and ask for a current valuation at the time of death. Estate agents for the property valuation

Once they have all replied, you can fill in the HMRC forms. The government sites are pretty clear these days, have a look at https://www.gov.uk/applying-for-probate/apply-for-probate.. I often found that by the time I had formulated the question I knew where to look for an answer. If you don't know what's next, post here

The HMRC phone line can be pretty helpful , especially earlier in the day when they are not quite so busy though I haven't had to deal with them in the time of 'rona.

Once you have probate , there may be more complicated things like advising of set up of trust. I used a solicitor for that part and the property transfer.

It's very satisfying to be executor, a real act of service for which there can be no thanks from the late parent. All the best.

I too am happy to answer PMs if there is anything you would prefer to ask in private.

[ElectiveAffinities]

Thank you everyone. Also to FinallyHere for the offer of further help.

I've dealt with all the necessary notifications etc so everything is ready to proceed - it's really the property and reporting to HMRC for IHT which is (to use a term I don't really like) triggering me, I know. My previous bad experience, in a situation that wasn't of my making but left me in a horrendous position, has left me pretty phobic about dealings with that branch of authority.

I know I need to do this for DM and I feel ridiculous reverting to a quivering heap of jelly. I tend to over-think things, which doesn't help.

Thanks again, I'll get going and be in touch if needed with those who've very kindly offered help.

[ElectiveAffinities]

Just picking up on something you said @FinallyHere - Once you have probate, there may be more complicated things like advising of set up of trust . Are you saying it should be possible to get probate before tackling any problems with the trust? I’m getting really worried about this, although I know it was a very common thing pre-2007 when the IHT threshold was raised.

From reading around it seems that nil-rate band trusts are generally now viewed as a bad thing and that we should have taken steps to dismantle it within 2 years of DF’s death. We were advised that this wasn’t necessary but now I’m alarmed we may be heading for trouble.

[FinallyHere]

Hi absolutely you need to pay any IHT due and obtain probate before you do anything to set up the trust. The will possibly instructs a trust to be set up and the estate up to the value of the nil band rate for IHT to be transferred into the trust.

Good news, this shelters that element of the estate from any future care home fees. Bad new it does incur an administrative / legal overhead, limits what you can invest in and importantly means you cannot use the additional IHT allowances available in future when property is handed down to children

The trouble is that no one can know which of the will become important in future to impact the value of the estate. If DM's estate is required for care home fees it might be good to have the trust to use to top up if necessary.

Without the trust, two parents can currently pass on approx £1M free of IHT to their children, if there is that much left after cate home fees....

If your DF passed away less than two years ago, it is possible with the agreement of all the beneficiaries to do a deed of variation to remove the trust.

If you do go with the trust, the easiest investment of the funds that we found was to make an interest free loan of the amount in the trust to the widow, who could then invest as usually in ISAs, bonds etc without generating any additional interest for the trust.

DM lived for a further seven years and was only in a home for the last six months so the trust essentially did nothing but use solicitors fees, but we were not to know that and it could easily have been different.

A great aunt lived to 104

[FinallyHere]

Sorry just reread your post, more than two years have passed.

We got probate, then used a solicitor to set up the trust and make a loan of the value to the widow. No biggie.

Just breathe, it will all be fine. There are lots of people around now who have some experience with this.

[ElectiveAffinities]

I've DMd you, @FinallyHere

[im5050]

My mum passed away last year I had to deal with everything
Once I did the probate of my mums will and it was all sorted out
I engaged a solicitor to sort out the property transfer and to set up the trust as my mums half was left to my sister & son with my dad having the right to live there then on his death it would go to my sister & son
It cost £280
If you are doing something similar feel free to pm me and I can give you the details of who I used
It took ages but that was mainly due to Covid

[picklemewalnuts]

I have no useful experience but want to offer a supportive handhold.

When we wound up dad's affairs, we found everyone we spoke to helpful and considerate. There was no sense of 'gotcha', with hmrc trying to make money out of us.

It's very hard to do these things while grieving.

[ElectiveAffinities]

Thank you both im and pickle. It does mean a lot that people are so understanding.

im the issue with the trust is that there already is one with my DF - my DM has now passed away and so that's the second death and there are possible complications around the trust. But thank you for kindly offering advice.