The Lemon Fool

Briefly: Daughter in law inherits the estate of her step-father (her mum passed away two years earlier). Estate is approximately house £400k, cash and premium bonds £100k.

She applied for probate and it appears she filled in the form incorrectly, as it was returned. She asked me (LF that is) what she did incorrectly since she has been unable to get help from any source.

The section on inheritance tax is the problem.

She had gross value of estate at £500,000.
Net value of estate for inheritance tax as £0.
Net qualifying value of estate also as £0

Because he gave her £15,000 over recent years and his cremation cost £1,000 she wrote gross value for probate £485,000 and net value for probate £484,000.

Because there is no inheritance tax to pay I suggested that the gross and net figures should all be £500,000. Is this correct?

Thank you, Paul

Paultry wrote:She had gross value of estate at £500,000.
Net value of estate for inheritance tax as £0.
Net qualifying value of estate also as £0

Because he gave her £15,000 over recent years

Wouldn't that make the gross value higher? i.e. £515,000.

Scott.

Have you used HMRC's Inheritance tax checker https://www.gov.uk/valuing-estate-of-someone-who-died/estimate-estate-value#use-the-online-inheritance-tax-checker which is a useful start point.

Presumably the £15k gifts "over recent years" can't be used up by the annual allowances and ignored?

https://www.richardnelsonllp.co.uk/chan ... %20reasons.

the estate’s gross value – this includes the total value of all the person’s assets and any gifts they made in the 7 years before they died
the estate’s net value – this is the gross value minus any debts, such as a mortgage or funeral costs
the estate’s net qualifying value – this is the net value minus any assets left to spouses, civil partners, charities or assets that are exempt for other reasons.

So all should be £500k plus a bit for the gifts.
Depending on the timing of gifts. You get a £3k annual allowance, possible to carry forward 1 years worth.
ALSO Gift-out-of-income are exempt too. If dad had a large Pension income.

I doubt you need it in your case but note step children explicitly DO qualify for Residential-NRB.

Gryff

I'm looking at the probate forms today, for the first time.

The probate form tells me fill in values from the IHT205 form:
Box D (gross value)
Box F (net value)

The nice thing about the IHT205 form is that I fill in all the boxes using my PDF reader (Foxit) and the pdf document automatically calculates the result in boxes D and F.

[The questionable part is, despite the probate form telling me to take values from IHT205, the actual IHT205 form says it's for deaths on or before 1 Jan 2022].

Another question on probate Form filling.

I'm reading the probate pdf form, just to check what's needed.

However, if I do an online submission, does it give me good opportunities to check what's been put in at the end, download a copy and edit it before submission ? In a similar way to an online tax return.

The rules were changed for deaths since 1 Jan 2022.
Prior to that date, you had to fill in IHT205 for excepted estates. Since then, you don't. No submittal to taxman at all. Just the numbers on the probate application. If the form helps you calculate the numbers that's fine.

The up-to-date rules on whether an estate is "excepted" or not are here: https://www.gov.uk/valuing-estate-of-so ... 600e2a2b7a .

Do beware that quite a few private websites (and even some gov ones) still have the old rules.

I found the online forms quite easy. Yes, you can edit stuff before you submit.

Gryff

The forms were resubmitted with £500,000 in each entry field (so I'm told) and so far have not been returned after a few weeks, so are probably now correct.

Simple mistake I believe. Paul