Inheritance Tax-Joint Bank Account

[SchoolRunEscapee]

Hi everyone,
Please be gentle, as recently lost my dad and I'm still reeling from it.

My dad passed away 5 weeks ago, he hadn't set anything up in terms of wills or anything, but I had a joint bank account with him which was all his money. He often liked me to do online shopping for him so that's why we had it, and I never used the money for myself. The only outgoing to me was £100 a month for a premium bond account he wanted set up for my
daughter.

My dad was a widower as my mum passed in 2009 and I am the only child.

As I say he passed 5 weeks ago he had an illness for a couple of months and we thought he was getting better, but then became ill and passed in the space of a week.

I haven't brought myself to cancel his state pension yet and I know they will take back any over payments and thats fine as it's all just in his account.
Im just wondering where I stand in terms of inheritance tax, there is about 373,000 in this joint account.
He wasn't in any kind of debt and didn't own a home. Will they take tax from this account on anything over 325,000?

It seems such a shame, he worked 45 years and had only 4 years of retirement, the state pension is gone, I'm guessing his work place pension will be gone and now they seem likely to take just under 25,000 if my calculations are correct.
Any help would be appreciated as my understanding of money matters is useless at the best of times, let alone when I'm grieving x

You have lost your dad which is horrible and does mess with your head but you will be more than quarter of a million pounds richer and you are worrying about paying your taxes ?

When you open a joint account you are jointly and severally responsible for the money, it was always classed as your money so no tax will be due.

when reporting the death look up the government’s death notification service, it will tell several places in one go

From Google

• Inheritance Tax:
• For inheritance tax (IHT) purposes, HM Revenue and Customs (HMRC) treats each joint account holder as beneficially entitled to the proportion of the account attributable to their contributions.

-

Thanks for the reply, actually as I mentioned I have been putting off dealing with this stuff because I am heartbroken about my dad. Today I was planning on summoning the courage to report his death and while reading how to do that, saw this information, just wanted to know where I stand. Thanks again

When my father died, assets in the joint account held with my mother were valued at 50% of the balance on the date of his death for his estate.

Nothing to do with IHT but that’s an enormous sum to be sat in a bank account (a current account?) and leaves you unprotected above £85k.

Would the setting up of a joint account using the OP’s father’s money not be treated as a gift if half of it is deemed to belong to the OP. If it is it could depend on when the account was set up, if more than 7 years then any such gift would not be counted for IHT but if less then it could be.
@SchoolRunEscapee I think you need to take advice from a probate solicitor.

@HermioneWeasleyyes really he just was unsure what to do with it. Most of it was a lump-sum from his pension. Do you mean it's unprotected if the bank was to have problems?

@LivLunait was less then 7 years ago

Thanks so much for the advice everyone it is much appreciated. Just crying here thinking about my dad and how he worked hard for all those years and had very little time to enjoy his retirement.

Sorry for your loss. You could use the tell us once service to make the admin side a bit easier. You receive a code when the death is registered and then fill out one form on line and then DWP eg will contact you re overpayments or money due.

@SchoolRunEscapee I’m sure your Dad would be pleased that his efforts will instead go towards making your life easier although I get that for now you would prefer to still have him with you.

By the way, the workplace pension will only be gone if it was a defined benefit scheme. If it was a defined contribution then what is left in the pot will pass to whoever he nominated and is not liable for IHT at all.

Were your mum and dad married? If so, and all her assets passed to your dad on her death, then there is no IHT on estates up to £650k, or up to £1m if a main residence is included and passed to a lineal descendant (like a child).

If you haven’t contributed to the joint account and it was intended that the money inside it was only ever your dads, then I would treat it 100% as your dads as he retained beneficial ownership over all the funds.

The £100 a month for your daughter can be excluded in its entirety, as he would have a £3,000 exemption per year to make gifts which would cover these.

You can report his passing via the ‘Tell Us Once’ service. That should notify DWP/HMRC and they will stop any pension and benefits.

Thank you so much@ShanghaiDiva and @LivLuna the grieving is terrible honestly I just feel lost, everything is a reminder of him. I don't want to deal with the money aspect at all but I also feel like he worked for years for it. It isn't about not wanting to pay the tax as someone above mentioned but just to know where we stand xx

@LivLunawhen he retired he took a lump-sum and then I think filled in an expression of wish form which listed me and my children as possible beneficiarys.

@Alaraethank you for the reply. Yes they were married at the time of her passing. Really she had very little assets as she was quite ill for years before she passed and he financially supported her. I think when she died he received some kind of small short term benefit but I'm unsure what it was.

@LivLunathank you for all your help x

That's very upsetting, but the bulk of the money will be yours.

It is not as simple as that
Take advice

It sounds like it could be a DC scheme if your Dad filled in an expression of wish form when he retired. A DB scheme would normally only require this in relation to the payment of death in service benefits which wouldn’t apply if he was already retired. However it is also possible that when he retired he used the rest of his pot to buy an annuity which would probably not be inheritable, if however he was drawing down on a pot of investments to fund his retirement then that pot will go to you and your children. You need to find his paperwork or get in touch with his pension provider to work it all out as soon as you feel ready to tackle it.

Thank you for your sympathy @RedHelenB I don't think I am coping very well at the moment, essentially can't talk about him without crying, nearly cried in Aldi today seeing some food he mentioned before his passing. Maybe I should hold off thinking about paperwork stuff for a bit. I think I put myself under pressure to sort it all out when I'm clearly not ready x

@LivLuna thank you so much for your continued help and sympathy. I feel like I need to pull myself together but I'm not quite there yet. All I really know in regards to his work pension is that he had a choice of a small lump sum and a higher pension or a larger lump sum and a smaller pension. He took the larger lump sum. I didn't talk much about the pension stuff with him, but the annuity thing doesn't ring any bells. I know this sounds stupid but I almost feel people will judge me if I don't contact them sooner.