Probate with No Will and Inheritance Tax to Pay Case Study

14 March 2018

Client Situation

Mrs C instructed our Probate Solicitors to deal with Probate after her mother, Mrs B, died without a Will, leaving Mrs C as the sole Beneficiary of the Estate. Mrs C is registered disabled with one symptom of her illness being that she is sometimes unable to talk, which inevitably makes communication more difficult for her.

Mrs B’s Estate consisted primarily of a house, some bank accounts and a car. The value of the Estate was pushed over the nil-rate band (the Inheritance Tax threshold) of £325,000.

However, Mrs B had made a number of Potentially Exempt Transfers (gifts) totalling around £125,000 in the last few years before her death. If the gifts had been made more than seven years before her death they would no longer have been added to the taxable value of the Estate, but unfortunately this was not the case.

How We Helped

Because of the restrictions to her speech, Mrs C provided us with authority to speak to her daughter. However, over the course of the administration we generally communicated by email, so that Mrs C could get in touch with us at the times that suited her.

We claimed the annual gift allowance of £3,000 for each tax year to reduce the value of the gifts, including the unused allowance for the previous tax year. 

As the Estate was liable for Inheritance Tax, the full tax return had to be submitted to HM Revenue & Customs (HMRC) for them to review. We instructed Mrs B’s bank to pay the Inheritance Tax which was due, after which HMRC provided a receipt which allowed the Court to issue the Grant of Representation.

Once the Grant of Representation had been issued we agreed to pay a small interim distribution to allow Mrs C to help her son with a deposit for a property purchase. 

The Outcome

The interim distribution meant that Mrs C was able to utilise some of the money that was due to her while waiting for HMRC to approve the tax return, which took several months. 

Mrs B’s property was put on the market. Initially an offer on the property was accepted for less than the date of death valuation which had been submitted to HMRC. If the property sale had completed at this price we would have applied to claim a refund through ‘fall in value relief’ for some of the Inheritance Tax which had been paid.

In the end this sale fell through however and a new sale was agreed for slightly more than the date of death valuation. This was treated as a Capital Gain rather than a correction to the original value of Inheritance Tax.

As the gain was less than the annual Capital Gains Tax allowance there was no additional Inheritance Tax to pay. As a result of this, a larger proportion of the Estate was then distributed to Mrs C, as the main Beneficiary of the Estate. 

Client Testimonial

“Thank you for being so kind and thoughtful during a difficult time. You are an asset to any company and I will sing your praises to anyone. Once again, thank you for everything.”

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 more information about Probate and Inheritance Tax see:

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