Estate Funds Distributed to Charities, a Probate Case Study

23 February 2018

Client Situation

Our Probate Solicitors were instructed to administer the Estate of Mr X after he passed away. The Estate consisted of a property and its contents as well as several bank accounts. Mr X had left a valid Will, in which he left set amounts of money to several charities. He then left the remaining Estate to a further 5 charity Beneficiaries. Co-op Legal Services was instructed by the sole Executor of the Estate.

How We Helped

After gathering in the required information we applied for the Grant of Probate. We calculated that there was no Inheritance Tax to pay, as Mr X’s Estate did not exceed the Inheritance Tax threshold (known as the ‘nil rate band’). The Inheritance Tax threshold is currently £325,000 for individuals in England and Wales.

As Mr X was widowed, we had the option to utilise the ‘transferable nil rate band’ of his late wife. This allows any unused Inheritance Tax allowance to be transferred from the Estate of a predeceased person to their spouse’s Estate. However, this was not necessary in this case.

Had Mr X’s Estate been liable for Inheritance Tax, the fact that he chose to leave so much of his Estate to charity would also have reduced the Inheritance Tax liability on the Estate. Under current laws in England and Wales, if you leave at least 10% of your ‘net Estate’ to charity, then the taxable portion of your Estate will be taxed at a lower rate of 36% instead of 40%. Furthermore, some assets are exempt from Inheritance Tax altogether when left to charity.

We contacted the charities to confirm that they were entitled to a share of Mr X’s Estate. As Beneficiaries of the Estate, we ensured that the charities were kept up to date with the Estate administration, throughout the Probate process. We informed them of offers that had been received on Mr X’s property and we obtained their consent for additional expenses that were required to sell the property and administer the Estate.

The Outcome

No Inheritance Tax needed to be paid on Mr X’s Estate, so the total Estate funds were distributed by Co-op Legal Services to the charities at the conclusion of the Estate administration process; which took 11 months to administer in total.

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*.

*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.

For details about gifts to charity see Making a Will and Donating to Charity.

Remember A Charity recognised Co-op Legal Services as the first corporate organisation to raise £15 million in potential charitable legacies through its Will writing services.

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