Must suddenly find 20k for probate? Is this right? HELP needed

[Chubbyspud]

I’m a little at sea on this so any answers, especially dummies guide standard are welcome. I might be being really stupid so here goes….

My Dad and I are executors on my uncles estate. My dad has just been told by the solicitors today that we must find 20k to pay the inland revenue before probate can be released. They need it now. This is the first we’ve heard of it and do not have 20k just hanging around. My poor dads in a bit of a panic. I’m going to speak directly to the solicitor myself shortly but before I do wondered if anyone can offer me advice on what it might be so I can streamline my questions and get straight to it to avoid running up a big bill communicating with the solicitor.

Is this a normal requirement? (I have never done this before so I’m flying by the seat of my pants)

Are there any particular questions I should be asking?

Does anyone know what this unexpected 20K might be for and why they don’t just deduct it from the estate?

For info in case it helps: My uncles passed away in October 2021 so could it be interest on the inheritance tax? It feels like a lot and also wondered why they can’t just take it with the inheritance tax? The estate includes the sale of a house which is not yet complete so not sure if that’s relevant. There is definitely enough in the estate to cover it.

You don't pay it, the estate pays it.

It sounds as if this is inheritance tax. It becomes due 6 months after the person concerned dies. There are ways of 'borrowing' it from the estate legally, and there are also specialist loans available. Speak to your solicitor.

You have to pay inheritance tax due before you get probate.

If he has bank accounts/ shares you can get them to pay directly (use IHT423) if there’s no liquid assets you either need a special probate loan or use your own resources and get refunded from the estate when the property is sold.

This is really helpful, thank you. I’m awaiting a call back from the solicitors now. He had liquid assets so not sure why he they can’t be used but I’ll ask

Are you sure the solicitor isn't just letting you know it needs to be paid by the estate before probate is granted?

Your Dad needs to contact the bank where your Uncle held his funds. Your solicitor should have informed you that, Banks have to release money for funeral expenses and taxes.

it is perfectly normal for this to happen, the bank will give you a draft for the money or send it electronically.

If there's not enough cash in the estate to cover the IHT, you can pay in 10% instalments and have probate granted on payment of the first instalment (at which point you can sell other assets and pay the rest off in one go). Your solicitor will know about this.

not helping the Op, but this is really helpful…I didn’t know that IHT needed to be paid before probate .everyday is a learning day🤷🏼‍♀️

yes it can be paid from the estate, yes it has to be paid before probate granted at which point monies can be distributed (Hence why HMRC want it paying before it all disappears). You should review how the solicitor has dealt with the estate and ensure you agree, at that point it is paid from liquid assets or as others have said a financial loan or similar specifically for this purpose.

if there is cash in the bank/liquid assets then the solicitor can send a form off to the bank etc to ask them to release the money and they will send direct to HMRC.
if there are no liquid assets then you can pay the tax by instalments. After the first instalment HMRC will allow probate to be granted. If you and your Dad can afford the first instalment between you then you could pay and claim back from the estate.
if neither of these are an option then you would have to look at a loan to cover the tax - there are specific loan products out there for this scenario.

Before you get probate granted , inheritance tax has to be paid . When my parents passed away we had a huge bill to pay upfront. As it was from policies that were paid out , we could pay a third of the bill. Inheritance Tax people accepted this and once the family home was sold we paid the remainder.

This was nearly 20 years ago so things may have changed but it was really stressful having to deal with that and a bereavement.

My dad would be rolling in his grave about the amount paid. Taxed while you’re alive, taxed in death.

Thanks you everyone, this is really helpful. I’ve had a bit more info from the solicitor. So some of the assets have been liquidated and almost half of the inheritance tax has been paid, so I’m slightly confused about the instalment because this £20k was described as the first instalment.

I’ve managed to source the funds to pay. Our solicitor told us to avoid the specialist probate loans, although I’m not sure why.

One thing that has struck me as odd is that none of this has been done in writing, only over the phone. Other solicitors we’ve used for other things (like house sales etc) always put everything in writing, especially the request for a large sum of money. Even the bank details were given over the phone. I’ve requested a written request and have received nothing yet, even though we were told that the situation was urgent and that we need to pay a soon as possible. I’m not trying to say the solicitor is being dodgy but it feels a bit slack at best. Is this normal or am I being unfair? I’m wondering if I should just phone HMRC direct and ask to pay them myself. I just feel uncomfortable transferring money without any written confirmation of where its going.

That sounds odd. Solicitors' emails are targeted for hacking, which probably explains giving the bank details over the phone, but insist on a summary in writing from the solicitor of what is happening and ask for copies of any correspondence with HMRC.

And pay the HMRC yourself - your solicitor should have applied for a reference number which you can use to make a BACS payment. There is a specific sort code and account number for inheritance tax payments, which you use alongside your individual reference number.

I’m so sorry for your loss. I worked in Adult Social Care for some time and saw many people lose almost everything they’d worked hard for to the social care system and then to the taxman at the end of their life. I’m no economist so I don’t know what the answer is, but it really does feel unfair and navigating it is a lot for the family to contend with when they’re grieving as well. Sending you my condolences 💐

Please make sure that all the allowances used are correct. for e.g. if you leave a property to a child IHT goes from being applied at 250k to 500k, also if woodlands are involved it is different and if it is left to a charity.

I have to say I would want it all in writing and all references quoted so you can pay directly. It sounds like they haven't negotiated partial settlements either. You should not be finding this money out of your own pockets AT ALL

I'd be more concerned that the solicitor hasn't advised you of your options.

They can either ask one of institutions where your Uncle had funds if they'd be willing to release monies for inheritance tax, or the fact you can take out an Executors loan (interest payable by estate) and the solicitor can set this up for you if you're not sure of the procedure.

Unfortunately, inheritance tax does have to be paid before Probate is released. I was a legal secretary for six years and a probate secretary for five, so should know.

I was recently dealing with solicitors for something different, and one of their letters said clearly "we will never give you bank details over the phone. Our bank details are xxx and these will not change"

I think there are many scams around this so be careful!

www.gov.uk/paying-inheritance-tax/yearly-instalments

IHT can be paid in instalments on some asset classes (including property) if there isn't enough cash in the estate to cover it. Probate can be granted as long as one instalment has been paid, which allows you to sell the asset and pay the rest. You still need to find enough for the first instalment, which is not always easy depending on how much is payable. We've just been through this with my FIL's estate. It's harder if the estate holds a lot of listed shares, in respect of which all the tax has to be paid before the shares can be sold- that's where loans can be helpful. It's a really bad system.

I'd be concerned about the fact your solicitor isn't advising you of all this and that they haven't given you anything in writing. Would suggest you ask for a full written breakdown of the value of the estate, IHT due (and the asset class it relates to), what has been paid so far etc.

I am concerned this is on a phone call, and not a letter.
It is entirely possible that this is a scam and not the solicitors.
Insist on it in writing, and ask for a full written breakdown.

The Revenue are really helpful about this sort of thing. It can take a bit to get through on the phone, but once you have, we have always found them to be clear, helpful and patient ( if you don’t understand it the first time) .

I’m sure you can pay directly, and that’s what I’d do. If your solicitor is so idle, incompetent or just plain dodgy that they won’t put a request for£20k in writing, I would not entrust them with the money.

We had this last year when my Mum died.

We had moved her affairs to a new solicitor closer to where she was living during the last few years. When the solicitor started to look at probate she said the first thing was for us to pay a similar amount to the OP.
Paying the money was not an issue but we wondered why we had to do it but the solicitor was adement.
Out of curiosity we contacted the original solicitor (who dealt with my Dad's affairs and drew up my Mum's new will). He was shocked that the request for payment had been made and he confirmed that no IT was payable on the estate.

Needless to say that the business was transferred back to the original solicitor!

I would check it out.
There are dodgy solicitors out there sadly.

Dodgy as…….

Never mind the 20k you haven't paid yet, I'd be more worried about the other 20k that's already been paid and who to. I'd call HMRC and check it's gone to them.

I don't understand why the inheritance tax due can't wait, where there's no liquid assets and there is a property, for the property to be sold before IHT being paid? I know it means it would take longer for people inheriting to receive their money but wouldn't it be easier for those left behind if the executor dealt with the sale of the property instead of the grieving parties having to do it as well as take out probate loans first? What does it matter how long probate takes?

@Chubbyspud

What was the outcome. ?