Inheritance tax and being executor of will

[Meezer]

I have power of attorney (health and welfare, and finance if the time comes) for my uncle, who has no children of his own. I am also executor of his will - hopefully he will live for many more years to come! He has left his house (he has no other assets) to a charity and (mostly) to be divided between my children.

However I recently read online that as his house is worth more than the tax limit (c £600k) it will be subject to inheritance tax, and I as executor would have to pay this before probate can be granted.
Is this true, and what happens if an executor doesn't have any money to pay please?

How much goes to charity? He can leave £325k free of tax to anyone he likes, and the amount he gives to charity will be exempt from tax as well. With tax on property you don't have to pay the tax due for six months from death. The tax is payable from the estate not by the executor personally and if there's no cash in the estate to pay the first bit of tax you can get a loan.

There's guidance on the HMRC website so don't panic. You can instruct a solicitor to help you too if you want.

Ha! Thanks- a loan!! Yes I've been panicking a bit...Don't want to let him down but worried I am not a financial wiz.

If he’s left a bigger proportion to the charity, and it’s expressed as an amount, they can be ferocious about getting it. If it was 50/50 I would be concerned too. Plus he might have care fees. What would happen to the house then? Charity gets £300,000 (if it’s a named amount) and your Dc get??? There’s an element of risk here.

I assume if he needs care I would sell the house to pay for it- he has already told me which home he would prefer if the time comes! I don't know how the amount for the charity is specified. I guess if there was nothing left for the family I could just withdraw from being executor or is it not that easy?

You could ask him to find another executor. However the wording of the will is important. Sadly your Dc might not get 1p if the wording stipulates a sum to the charity and the remainder to your Dc. Is it possible to chat to him? Difficult I appreciate. Clearly if £32,000 it’s less of a risk but care home fees rack up very quickly. Plus if he’s in a home he still might be quite capable of making financial and health decisions.

Anything left to a charity is exempt from IHT, so you can take that amount off. If the charitable gift is big enough you can also benefit from a lower IHT rate.

If there is IHT to pay (and nb the threshold will be £325k not £500k) in relation to the house, you can pay in instalments- you only need to have paid the first instalment for probate.

Alternatively, downsize now. Give away some money now and live for 7 years. Plus has he got savings? Could be a lot more than £600k.

You agree instalments with hmrc until the property is sold. Of course they take £££ interest. But it's standard so you shouldn't have to worry.