Acting Royalties Probate Case Study

04 April 2018

By Probate Solicitor Kate Rutherford

Client Situation

Mr S contacted our Probate team through our website following the death of his mother, who was a retired actress and had an ongoing income from royalties. One of our Probate consultants met with Mr S and his sister to explain the Probate process, take details of the Estate and provide a fixed fee quote for our Probate service.

With our Probate Complete Service we take full responsibility for getting Grant of Probate and dealing with the Legal, Tax (not VAT), Property and Estate Administration affairs*.

Mr S instructed Co-op Legal Services to administer the Estate on his behalf and the case was allocated to our Probate Solicitor, Kate Rutherford.

How We Helped

Because Mr S’s mother was a retired actress, her ongoing income from royalties formed part of her Estate. This made reporting the value of the Estate to HM Revenue & Customs for Inheritance Tax purposes more complicated. It was necessary to calculate the value of future royalties likely to be received and include this in the total value of the Estate. This is called ‘capitalising the royalty income’.

Because the deceased had not worked during the two years leading up to her date of death, it was not possible to claim Business Relief on the capitalised royalty value. It was therefore very important that this figure was calculated as accurately as possible, to ensure that the Estate did not incur an unnecessarily high Inheritance Tax bill whilst also meeting HMRC’s requirements.

The Outcome

Probate Solicitor Kate Rutherford calculated the capitalised royalty figure using the deceased’s royalty income history and a unique formula that she agreed with HMRC’s Valuation Office.

Inheritance Tax was paid accordingly. Once the deceased’s property sale had completed, Kate received Inheritance Tax clearance and finalised the Estate administration.

Client testimonial from Mr S: “I want to thank you for everything you’ve done during the last year. My sister and I feel that no-one could have been a better navigator. You steered us through the whole process with great professionalism and skill. Probate was a mystery to us, but you explained every step with great clarity: superb communications.”

*We can also pay all the costs of a Co-op Funeralcare funeral, providing the Estate owns sufficient assets which can be sold in due course to repay our costs.

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