Death. Avoidance of a Will & Tax avoidance etc

[Kibbles01]

Is it legal to sign over house deeds, bank accounts etc to one child and give a lump sum to another without the need to make a Will or declaring it?

Last year my mother died from cancer. She was diagnosed in March 2016 and died in November 2016. She was of sound mind until the end.

There was a Will which we were told had been changed (around 8 years ago) but since her death no-one has mentioned anything about that Will and nor has anyone found it or brought it up but from conversations had, it is obvious that things were signed over before her recent death which benefitted two of her children and excluded two other children.

We don't believe she was mainpulated in to doing this but since her death things have come to light and want to know if it is legal to sign everything over like this and what about inheritance tax issues etc. None have been paid.

There is a sizable property involved along with other things and two of her children will not see any of this because of these actions and is causing great distress and has caused a fallout with the sibblings.

Can anyone please advise.
Many thanks

This is what the government says:

Gifts

There’s usually no Inheritance Tax to pay on small gifts you make out of your normal income, such as Christmas or birthday presents. These are known as ‘exempted gifts’.

There’s also no Inheritance Tax to pay on gifts between spouses or civil partners. You can give them as much as you like during your lifetime, as long as they live in the UK permanently.

Other gifts count towards the value of your estate.

People you give gifts to will be charged Inheritance Tax if you give away more than £325,000 in the 7 years before your death.

What counts as a gift

A gift can be:

anything that has a value, such as money, property, possessions
a loss in value when something’s transferred, for example if you sell your house to your child for less than it’s worth, the difference in value counts as a gift
Call the Inheritance Tax and probate helpline if you’re not sure.

Exempted gifts

You can give away £3,000 worth of gifts each tax year (6 April to 5 April) without them being added to the value of your estate. This is known as your ‘annual exemption’.

You can carry any unused annual exemption forward to the next year - but only for one year.

Small gifts up to £250

You can give as many gifts of up to £250 per person as you want during the tax year as long as you haven’t used another exemption on the same person.

The 7 year rule

If there’s Inheritance Tax to pay, it’s charged at 40% on gifts given in the 3 years before you die.

Gifts made 3 to 7 years before your death are taxed on a sliding scale known as ‘taper relief’.

Years between
gift and death
......................Tax paid
less than 3 - 40%
3 to 4 - 32%
4 to 5 - 24%
5 to 6 - 16%
6 to 7 - 8%
7 or more - 0%
Gifts are not counted towards the value of your estate after 7 years.

www.gov.uk/inheritance-tax/gifts

Whilst alive and of sound mind your DM could do what she wished with her assets and give to whomever she liked. However if she gave away assets and died within 7 years then these are likely to be subject to inheritance tax.

The executor of her estate should be following this up. Do you know who the executor is?

If you think your DM was manipulated into making transfers or that the transfers were not legitimate then I would suggest you need to speak to a lawyer.

Even without a will, her estate needs to be finalised, and any inheritance tax paid if it is above the threshold, including gifts made within the last 7years.

The pp by quitealot is very good for info.

Anybody close to her can apply to manage her estate, you need to get letters of administration if there is no will. The house will need valuing etc.

You may want to take initial legal advise.

Assuming you are one of the left out DC, you have my sympathy. My DM gave my DB a large lump sum, keeping it secret from me. I would have found out on her death 2yrs ago, as a receipt was kept, except she blurted it out before then when ill. In her case, DB had definitely used blackmail, but she was as to blame too - she confided in other relatives but not me. I also expected him to have made her change the will until the minute we sat in front of solicitors. It was an awful time.

Who would have executor or witness a new will. Was there Probate? Timing is crucial in regard to IHT and financial gifts.

Thanks for the info. From what we can make out is that the mother mum signed over the house to one of the daughter's from her second marriage as the remaining spouse doesn't speak much English. There is talk of this daughter selling the house, finding herself a flat of her own (as she lived in the family home) and the father moving back to his own country and they will then both live off their leftovers. House is worth something around £650K so no small pickings. There is other money there too and another daughter from the first marriage who has been gifted a large sum of money (thousands).

We think the signing over of everything happened within the last 6 months or so, not before. This does not fall within the 7 years thing mentioned earlier. There was an update of the original Will over 8 years ago but seems like there was a change of mind and everything was signed over and gifted before death.

Surely they must all have to pay some sort of tax and for someone who only earns a small wage, it would look very conspicuous to suddenly have a large sum of money in their bank account so wouldn't the bank need to ask questions and want proof of where this money came from.

With regards to probate. If everything has been signed/gifted over to other members before death with or without a Will when does probate come in to play if at all. We keep checking the register but nothing is coming up yet for that month.

OP how are you thinking that if things were signed over 6 months before the death they won't be included in the inheritance tax set out by a pp?

I would have thought that if they were signed over 6 months ago, then they would be liable to 40% tax... (well, for the stuff over the tax free allowance which is about £350K)

Was the house left over from the first marriage and dc from the first marriage expecting some share of it - from the father's will? Unfortunately I think that mirror wills - where one person leaves their spouse everything with a clause that their share gets shared between dc when the second spouse dies are worth less than the paper they're written on for those expecting to inherit something from them the second time around - once the money is given to the spouse then it becomes theirs and they can do whatever they want with it...

if the mum was married then is there anything that the husband gets automatically? And if there wasn't a will then the laws on intestacy come into play, so the current husband would get a share even if all the assets had come from the previous husband.

Not a lawyer or accountant so only talking in general terms on what I've learnt through dealing with these things myself or through MNet so do check it out fully - but don't think that money given away 6 months ago will be tax free, which is what your previous post seems to imply - sorry if I've misunderstood you.

You are absolutely right. The signover as I'll call it we think was made within the last 6 months. A large sum of cash to one daughter and the property and everything else to another daughter or remaining spouse.

We are aware that everything usually goes to the remaining spouse which is fine, it's the seedy world of what is really going on that is bothering us.

There has to be probate whether there's a will or not. This page tells you how it should have happened:

www.gov.uk/wills-probate-inheritance

Was the house definitely signed over or was it set up for her h to inherit(tax free) and then pass on to his dd.

As the gifts were less than 7 years ago and in aggregate above the IHT threshhold then tax will be due. This would not be the case if the gift were to the spouse. I am not sure how this helps the other children, however, if there is nothing left in the estate after these gifts.

With regard to probate, if everything was already signed over to someone else then is probate still going to happen as the new person now owns the property and monies not the dead person. Hope this doesn't sound dumb but it's very new to us.

Have you checked land registry to see whose name is currently on the deeds and when it was last changed?

I guess if there was a will it could be challenged - albeit that's expensive if there's not a lot in there.

And it's also about how it feels about being the one (or few) that don't inherit and don't get to know anything - can feel like a kick in the guts that you can't talk to anyone about and is just really hurtful (particularly if some siblings receive a massive amount and others don't for no apparent reason) - being able to see the will means that there might be something relevant or explanatory in it.

Good luck OP

With regard to probate, if everything was already signed over to someone else then is probate still going to happen as the new person now owns the property and monies not the dead person. Hope this doesn't sound dumb but it's very new to us.

Her estate will be made up of what she had left PLUS large gifts made in the last 7 years and inheritance tax will be due

Yes I think probate should still happen - because your mum was in pissession of them less than 7 years before she died.

Do you have legal insurance on your house insurance? It probably won't cover challenging the will but they will probably be able to tell you the legalities of what needs to happen and who needs to do what...

With regard to probate, if everything was already signed over to someone else then is probate still going to happen as the new person now owns the property and monies not the dead person.

Yes, as the gifts were substantial and made less than 7 years ago.

You need to make sure that probate actually happened. Search for the probate here, if you don't already know:

www.gov.uk/search-will-probate

I'd get a solicitor on to this right away. Sounds a bit dodgy to me. Have you seen a copy of your Mother's will

Do you know who the solicitor is who is dealing with this? Or who is executor?

The Will of 8 years ago may be lodged with a solicitor, the one used to draw it up. If you know who that was then start there. I suppose if people think she died intestate (perhaps because the two who received the gifts said there was no Wil?) then no one would look for a Will?

You need to see a solicitor for definitive advice but as a PP has said if all was left by will to her husband then no IHT would have been due.

That's very true - the old will still stands unless the new one can be shown... Unless your mum got married after she had written it as I believe that invalidates it unless written very specifically not to be invalidated in that case (will blur over the legalities - just know enough to know that it can be an issue so check!).

Do you know who the executor of the estate is yet? because if they try to pull a fast one and that includes trying to say there was no estate because the house was no longer hers - then they could find themselves in a lot of trouble because they have a legal duty to execute the will properly and make sure all the tax is paid. So they could find that they might have to sell the house to pay lots of tax on it when they wouldn't have done if it had passed to the husband...

There can be deeds of variation but these have to be agreed by everyone (no idea if they can undo things like giving houses away though - and again - need to check the legalities as the one I was involved with was done with everybody's understanding and blessing, very different from your situation...).

even if there is a will, there may be nothing left for others to inherit under the will because of the gifts she made, i..e the will would not enabel you to clam back gifts made in life. . There shoudl still be probate or administration (i tihnk it is called probate if there is a will and administration if there is no will) because the gifts were in the last 7 years so it will be necessary to calcuate the inheritance tax.

Op

My mum died 2 yrs ago. She had given my DB a large lump sum about 4yrs earlier, and similar to me the year before (to even things up when it came out about DBs money)

The calc for probate was sum of money left at death, house value and both gifts. Total was under IHT value, but if it hadn't been, tax would have been due on full amount.

As others have said, your mums estate needs probate/letter of administration, and the figures submitted for that and IHT must include the gifts given. IHT should start to be paid within 6 months of the death. From gov.co.uk website

send Inheritance Tax forms within one year
start paying tax by the end of the sixth month after the person died - you can make a payment before you finish valuing the estate

I suspect as the money was given away, no one has realised it will still be taxed and therefore no one has done probate? I think you need to get legal advise, as others said, esp if you can find no record of your mum on probate website. Paying the correct tax is a legal obligation, so whoever administers her estate must do so.