IHT Am I allowed to be paid back for paying for my DP care?

[TheHappyLoser]

Can anyone settle an agreement? (We aren't really arguing - we just don't know who's right!

My last remaining DParent sadly died last month.
My DSis and I are in the process of selling their home and going through probate as their house is worth more than £400k (they are divorced). We are both executers of the will.

My DParent was elderly and became very frail very quickly so we decided to try and keep them at home rather than sell their house and put them in a nursing home for the last couple of months of their life.

DParent had no money other than the value of the house so I paid for their full time live in care (they could afford the day to day household running costs eg gas bill etc with pension income) from my savings.

The care bill costs (I have the invoices etc as we used an agency) was £18k total which I paid weekly to the agency.

I did assume that I could just be paid back that debt of £18k from my DParents estate.

My DSis is worried that that we can't and that we need legal advice as it looks like we are trying to reduce the amount of IHT we have to pay?

I really don't think we do and am loathed to spend any more money on a solicitors as we spent loads on one when our other parent died and it was a complete waste of money because they messed up and we ended up doing probate ourselves AND having to pay the hopeless a solicitor.

Who's right?

1. If it was agreed that you would meet these bills and be reimbursed then they are a legitimate debt of the estate, and should be settled like any other debt out of the assets before the net amount is distributed. You have paperwork to back them up and there should be no problem

2. Are you re there will be IHT to pay? The threshold in the UK is £325,000, rising to £500,000 where a parent is passing their home on to their children

As above really. Is the total estate worth under 500k and did you get house valued by a conveyancer for probate purposes or is the sale in progress (as if not, maybe you have over valued it?)

Sorry for your loss

If it’s a legitimate debt then yes you can be reimbursed with no tax consequence.

Did your other parent use up their NRB? If not, that can be added to the recently deceased’s NRB plus the residence allowance.

Are you doing the IHT return yourself? I’d recommend an accountant, it’s a complicated tax.

Not unless you have proof of an agreement to that effect. But if the previous parent 's estate settlement didn't use their full IHT threshold you might find there is less or no IHT to pay and you could hopefully get the other heir/s to repay you.

If the house is left to you and your sister the IHT threshold rises to £500k because there is an additional allowance for the house. So you won’t have to pay IHT if there was little remaining cash.

Are you and your sister executors?

If the estate (don’t forget to deduct legitimate executor expenses including funeral cost, Estate Agent fees, death certificate paperwork etc) ends up being less than £500k then your DSis could simply divert more of the estate to you via a Deed of Variation from her share. You can find templates on what to write online.

With the other parent we did use their IHT allowance (they had other children too) so their estate was split between 6 of us, but there was still IHT to pay.

There are emails between my sister and I (easiest way to communicate as we are in very different time zones!) with me stating that I was happy to pay for Parents care on the basis I would be paid back from the estate which she was entirely happy with, she would have done the same but as she is abroad it was much easier for me to do it.

We are both executers and the only beneficiaries of my parents will (apart from a few small cash gifts to charities & grandchildren).
There are no other debts to pay aside from funeral costs etc (which I also paid for).

What sort of paperwork is needed here? My MIL has gone very steeply downhill and we are at the early stages of getting care in for her. BIL ‘thinks’ he has some power of attorney paperwork somewhere from years ago that has never been put into action.

Is it to be agreed between siblings, or with the parent needing care, or through a solicitor?

You need legal advice esp as the circumstances of first parent to die were complicated to begin with.
You're dealing with a £400k estate. Stop penny pinching. If you mess up as an executor it's a personal liability.

If you think the estate will be over 500k I would pay for some tax advice. It sounds like your agreement may not be between you and your mother? See what a tax accountant says - just pay for that advice not the whole probate.

Maybe the money needs to come from whats left of the estate after iht (only due if it's worth over 500k) and then you divide what's left between you after that?

Debts owed by the deceased are deducted before IHT is calculated. You have invoices and as you and sister are executors and are in agreement on the issue (ie she doesn't dispute the money is owed) you can repay yourself before you calculate what, if anything is due to HMRC in the same way you'll be settling utility bills etc (noting what PP have said about thresholds where the estate is going to direct descendants.) You will find the information you need at gov.uk

Thanks Jenny

I'd love to have a competent and efficient solicitor in my back pocket, but my experience of the profession I've had so far in my life has lead me to believe they are few and far between.
Ideally I'd prefer to feel with HMRC direct, and thanks everyone got your help.

We've done nothing untoward or illegal or immoral as far as I'm concerned, just family helping out family.

Sorry for all the typos, I'm knackered and on my phone which has a smashed screen at present!

@TheHappyLoser I can understand your reluctance to seek advice but I really think in this situation, it would be of benefit to you.

Try searching for solicitors in your area who are STEP qualified. STEP stand for Society of Trusts and Estate Practitioners. It's a specialist qualification in this area and those who have it are not jack of all trades but experts in the field.

www.step.org
then member search

Thanks lemon

Yes a tax accountant is probably want we need rather than a solicitor as the estate is over £500k. Thanks for the help.

I am pretty sure you are able to get this from the estate, as long as you can show that you used the money to pay the care fees. Look at the IHT400 notes, which are here. I think you have to fill in an additional schedule (IHT419, I think) in which you specify what the debt owed was for etc. Provide as much evidence as you can, and I think this is fine.

In case it is helpful I have posted elsewhere (here) about my experience of applying for probate without a solicitor - we found it straightforward, and were very glad we did it ourselves.

ps - See around page 49 of the IHT400 notes

I dealt with exactly this scenario without solicitors. DB and I are both executors and the only beneficiaries and have always been in agreement throughout which made things relatively smooth. As others have said, the care fees are a debt the estate can pay before IHT. So long as you have receipts and you and your DS are in agreement it will be fine, same as any other expense.
Yes the forms are long winded and take a bit of effort to understand but for someone prepared to put the time in, it's perfectly possible to get probate without a solicitor, even when IHT is due. I would say it's likely to be a slow process though. We had no pressure to sell the property so could take our time, if we had needed a quick sale we may have proceeded differently.

As her home has been willed to her children, there will only be 40% IHT payable on anything over that. So if it’s worth £600k, £40k IHT is due.
If you paid out £18k care fees, that would equate to just over £7k IHT on that amount, = £3500 per sibling. A solicitor may well charge that much!