Probate -IHT query

[rainforestsloth]

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.

Hi
With that amount of money at stake it is worth getting professional advice, either solicitor or good financial advisor. Getting it 'wrong' could cost lots.

If assets are left to the spouse there is no IHT

If the value of gifts is less than £325,000 in the 7 years prior to death there is no IHT

www.gov.uk/inheritance-tax/gifts

Thanks for the advice I think we will go with a solicitor as it is maybe a bit more complicated than I initially thought.

You could check with the tax office as there can be a 'sliding scale' of tax for gifts depending on how long ago they were made (if these were really recent, then it may not apply).

Ah, the link has the sliding scale, should have checked first

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.

If the house was in joint names it goes directly to the other joint owner and does not form part of the estate.

Gifts made within 7 years are included in the estate but the IHT charged on them is worked out on a sliding scale known as 'taper relief'.

If your FIL's estate, including any gifts made with 7 years of his death but not not including his share of the house, totals less than £325k, there shouldn't be IHT to pay.

I have been an executor 4 times but I am not a lawyer and there is no substitute for professional advice.

Anything that passed to his spouse will not form part of the estate for IHT purposes. Therefore the gifts will fall within the INT threshold and no tax is payable.

Thanks a lot that info helps. We have an appointment next week with a solicitor but I do feel a bit more informed now.

He can give £325k to people other than his spouse before you have to worry about IHT.