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Original poster

Inheritance Tax, help!

30 replies

HelpIHTPickle · 29/05/2019 12:23

Hello

My MIL recently passed away and DH is due to meet with solicitor soon to start the probate process. MIL lived in a modest 2 bed terrace worth around £100k, however she spent many years of her life collecting certain items (sorry, I'm not wanting to say what these are), some of which are apparently quite rare. She told DH and BIL years ago that it was all worth over £1 million and that when her time came, they should 'flog the lot on ebay'. The items are numerous (apparently in the hundreds, if not thousands).

However, BIL has mentioned that they will be liable to pay IHT on this before it can be sold. If it's true that the collection is worth £1m, it means a bill of over £200k - how on earth is this meant to be paid if the items cannot be sold upfront??

We have 3 young DC and a mortgage, we both work, our combined income is 40k a year. I'm losing sleep and getting stressed over this Sad can anyone offer any words of wisdom?

OP posts:
RedHelenB · 29/05/2019 12:54

Surely they are only worth what someone will pay for them. Could you get someone in to value them and at least then you'd know today's value.

LIZS · 29/05/2019 13:00

You don't have to pay iht immediately but yes longer term the value of such assets is subject to iht. You probably need a specialist to give you a valuation.

BackOnceAgainWithABurnerEmail · 29/05/2019 13:04

Probably, they’ll need to be valued, the IHT calculated and then sold in order to pay the bill. You need clarity on what to do if what they fetch is under the valuation.

What I would say is that collectors often vastly overestimate what their collections are worth. They tend to add a % to what they paid but values go up and down so unless it’s Chippendale furniture, gold or precious gems mil may have been over optimistic.

BackOnceAgainWithABurnerEmail · 29/05/2019 13:08

IHT isn’t due for 6 months though. So if she died recently you do have time.

zucchinicourgette · 29/05/2019 13:15

It’s true that usually you do have to pay the IHT bill before you are allowed to sell the assets though.

I agree with others that the first step is a professional valuation. I too would be skeptical of her estimation of their value.

I also wouldn’t be selling £1m worth of collectors items on eBay. If they are that valuable talk to an auction house.

rideawhiteswan · 29/05/2019 13:16

Do get someone in to get a price that they would buy them for or what they would get for them after selling at auction minus all the selling expenses, this is important you don't want a valuation for insurance purposes you want the amount they would pay for them.
Then you just go to the bank to get a loan which you can pay back from the estate, banks do them for this purpose.

zucchinicourgette · 29/05/2019 13:18

If they really are as valuable as she believes, you may have to get a bank loan to pay the tax bill.

Oddbutnotodd · 29/05/2019 13:18

As someone posted before get the items valued before you lose anymore sleep. The collectibles market does not always rise.
Make sure you initially get a few items valued just in case they are worth a lot. If they are you will probably need to up the contents insurance on the property until they are sold. Also insurance valuation is generally higher than the price that an item may sell for.

BogglesGoggles · 29/05/2019 13:20

You don’t have to pay upfront. You can pay it over up to ten years in some cases but most people pay when the asset is sold.

Sicario · 29/05/2019 13:20

There is a simple probate procedure for small estates, whereby you can self-declare the value of the estate if it is below a certain amount. (Not sure what that is now, but 10 years ago it was around 350,000.) Bear in mind that your MIL may have been over-enthusiastic about the value of her collection. One man's trash is another man's treasure.

CornishMaid1 · 29/05/2019 13:34

First thing, you need to get someone in to do a professional valuation of the items, both so you know where you stand and also to calculate the Inheritance Tax.

Although IHT is does not incur interest for the first 6 months, on 'ready' money (i.e. everything bar land and property) you pay the IHT before you can apply for probate, so any IHT on those items gets paid upfront.

If the collection is that vast and there is not enough cash/accessible money available in the estate to cover the IHT bill upfront then either you would have to take a loan to pay the IHT, which you can pay back when the items are sold, or you will have to see if you can get a special agreement with HMRC to let you have the probate before paying all the IHT, but that is extremely rare.

Original poster
HelpIHTPickle · 29/05/2019 14:02

Thank you everyone for your insightful replies. If IHT is due and we pay in instalments over ten years, would probate be granted on this basis? Or would the instalments need to be paid first before items can be sold?

This is starting to cause no end of headaches among DH family, mainly instigated by unscrupulous SIL Angry

OP posts:
Sicario · 30/05/2019 10:52

If I were you I'd stay well out of it. This is for your DH to sort out with his sibling(s).

BlackcurrantJamontoast · 30/05/2019 14:24

I assume that you think they have no value?

What are they? I grew up living in an antiques shop which is still a family trade. The value of antiques goes up and down all the time.

Assuming they are not beanie babies or franklin mint.

Where did she buy them? Do you have any receipts? Auction catalogues?

BlackcurrantJamontoast · 30/05/2019 14:25

I think it would be hard to prove that she hadn't given them away more than 7 years ago to her family.

BlackcurrantJamontoast · 30/05/2019 14:26

Ebay is a good place to get a price guide. Does she have an eBay account? You can view past purchases for years.

BlackcurrantJamontoast · 30/05/2019 14:28

1000 items would need to be worth £1000 each for it to be a million.

Original poster
HelpIHTPickle · 30/05/2019 14:35

I think a few things were bought at auction (including a dress which was owned by a very famous film star), others were at antiques fayres etc. MIL was quite old fashioned in that almost everything was paid for in cash, no idea about receipts etc. I don't think DH and BIL have got that far yet tbh.

OP posts:
BritInUS1 · 30/05/2019 14:42

They need to get professional advice on this

Original poster
HelpIHTPickle · 30/05/2019 14:46

No eBay account I'm sure, MIL was a real technophobe but would occasionally use it to check potential values on items.

OP posts:
BlackcurrantJamontoast · 30/05/2019 15:12

Ok, they need verification for dresses worn y x or y etc. Did she keep receipts and logs?

If it is memorabilia then very hard to price. Could be worth lots more or lots less than when purchased. There are specialist auction houses.

Not a lot sells at antique fairs for £1000 a go though.

Original poster
HelpIHTPickle · 30/05/2019 15:56

She handwrote all the items into log books, as for receipts, I have no idea I'm afraid. Some of her things had certificates of authentication, I do know that.

OP posts:
redstapler · 30/05/2019 20:38

You've got six months to pay. Ring up Sotheby's/Christie's, get them in to look at the collection tomorrow and if they're worth anything they will auction them for you. I don't understand why this is an issue - just sell them then you'll have an actual value.

sotired2 · 30/05/2019 20:42

If fil inherited them no iht payable as its between spouses so if he was to then sell and give cash to you or give items so long as he lived 7 years after gift it would be iht free. Need to get valued asap so you all know what you are dealing with and if alot of money need to get advice from a professional who knows about iht assp