IHT planning...what have you done?

[taken2often]

As usual some disention. This is why I stated print off the guidance and use as you fill out the schedule. Do not presume anything thats where I went wrong in the past. As far as I can gather HMRC work on the tax year for gifts out of income. For example I had to change a 500 pound gift at christmas to part of the 3000 allowance even though I had plenty of income to cover it, because it was over 250 and only once a year. I am not making this up. I have spent days on my notional death. As I said I think this is the best one yet as I actually used the guidance properly. The pages went from 80 odd in 2021 to 90 odd 2022.

There is an anomoly regarding ITH 412 in the guidance, where it does not tell you how to claim exemption. Sometimes what you assume, is not fact.You need to read everything very carefully.

Who knows. If you have an estate grossed at 1.5m a solicitors fee at 3% =45k at 5%= 75k this would e justfied for 7 years research. Charges nearly impossible to dispute. Also charges come out of Net after IHT. Now you know why it takes so long to close an estate time costs money.

Bob

[scrumpyjack]

One point I am not clear about on IHT403 re gifts out of income. If husband and wife co-mingle their finances so that income and expenses all go through a joint account, how do you decide who made the gift and how much their income, expenses and surplus income are? Obviously you could just divide all of those by 2 or do you simply say as long as the gifts are covered by the surplus income (taking the aggregate figures for the married couple) they meet the test?

We certainly manage our finances in this way and regard all income and expenses as joint.

[Lootman]

If you have an estate grossed at 1.5m a solicitors fee at 3% =45k at 5%= 75k this would be justified for 7 years research. Charges nearly impossible to dispute. Also charges come out of Net after IHT. Now you know why it takes so long to close an estate time costs money.

I don't know what solicitors charge these days. But if it is £150 an hour then that justification implies 500 hours of work!

I struggle to understand how 7 years research could possibly involve anything like that period of time, except perhaps in rare cases where the financial situation is very complicated. I have only done three probates rather than your eight, but I think in each case the research took maybe one afternoon, with a few more hours for the form-filling.

The average unpaid executor does not have 500 hours of spare time. That is equivalent to 3 months of workdays! And if he/she paid £75,000 of the estate's money to pay someone else to do it then the beneficiaries would be up in arms. The one time I hired a solicitor for part of the work, it cost £2,000. But in that case I was the sole beneficiary so it was my money to spend. And I had to provide all the information i.e. do all the research anyway.

[taken2often]

To Scrumpyjack. I do not have a spouse so I have no knowledge about what you desribe, but I do think it is covered n the guidance. As I stated what you think is the case might not be so. This is why I suggest strongly that you read this IHT Guidance.

Bob

Lootman
The Executor who does nearly all the leg work will save a fortune. If they pass it to a solicitors who has legal liability then you are at their mercy. It also depends on the number of Schedules to be filled out, mine was easy but some looked very complicated. Who knows what hourly rate may apply, but I think they have an automatic percentage in their head. The alternative is the computerised hourly billing. My first accountant was very expensive when challanged he brought out a computer print out showing billed hours that was not factual. His employees must have been using our account to cover themselves. Who will own up to that. So to identify any IHT anomolies they have to carry out a very slow 7 year search. In the mean time they have a good current idea what IHT may be due within the first six months so they can either loan you funds or arrange direct payment to HMRC from
a source bank building society etc This is allowed otherwise no movement until probate or confirmation in Scotland

A number of years ago a friend did a very simple estate herself less than 200k, with a little help from her solicitor. He told her she had saved about 5,000

Bob

[Lootman]

Lootman,

The Executor who does nearly all the leg work will save a fortune. If they pass it to a solicitors who has legal liability then you are at their mercy. It also depends on the number of Schedules to be filled out, mine was easy but some looked very complicated. Who knows what hourly rate may apply, but I think they have an automatic percentage in their head. The alternative is the computerised hourly billing. My first accountant was very expensive when challanged he brought out a computer print out showing billed hours that was not factual. His employees must have been using our account to cover themselves. Who will own up to that. So to identify any IHT anomolies they have to carry out a very slow 7 year search. In the mean time they have a good current idea what IHT may be due within the first six months so they can either loan you funds or arrange direct payment to HMRC from
a source bank building society etc This is allowed otherwise no movement until probate or confirmation in Scotland

A number of years ago a friend did a very simple estate herself less than 200k, with a little help from her solicitor. He told her she had saved about 5,000

Yeah, I think that in particular naming a solicitor to be the executor of your estate is something you only do if you really hate your beneficiaries. But then if you do hate then, why are you leaving them any money?

On the other hand subcontracting a piece of the work to a solicitor can make sense, if you are unsure of something. As the next of kin you end up doing a lot of the research anyway, since a solicitor won't know as much about the deceased as the NOK does.

Part of the reason I don't use gifts-from-income is the sheer complexity of the required documentation for that, as you described very well. Which in turn runs counter to my desire to makes things very simple for my executor(s). So I use gifts from capital, the various types of small gift allowances and gifts to charity. But not gifts from income.

The IHT mitigation strategies I have adopted are the simple ones. Nothing complicated or messy, or that requires masses of paperwork.

[taken2often]

I think many do just hand it over to a solicitor. The estate I mentioned less than 200k. A relative, Qualified Accountant and in general a very smart guy stated he could not have done it. It is just weired, people wait til January and then get accountants to do their self assessment, Pay up to two grand to make out a Power of Attorney. I paid about £85.00 each for the trhree I have done. These are all easy and help is available but concentration and wanting to learn is the starting point.

Have you noticed the recent fad of asking if you want a receipt. This means that thousands do not check their statements, how dumb or lazy is that

Bob

[scrumpyjack]

I think many do just hand it over to a solicitor. The estate I mentioned less than 200k. A relative, Qualified Accountant and in general a very smart guy stated he could not have done it. It is just weired, people wait til January and then get accountants to do their self assessment, Pay up to two grand to make out a Power of Attorney. I paid about £85.00 each for the trhree I have done. These are all easy and help is available but concentration and wanting to learn is the starting point.

Have you noticed the recent fad of asking if you want a receipt. This means that thousands do not check their statements, how dumb or lazy is that

Bob

An expensive mistake, handing it over to a solicitor, IMO. The relatives are in any case going to have to gather all the information to give to the solicitor so if any of them are intelligent and methodical, it is but a small step to prepare all the info that is needed and then just get the solicitor to deal with the IHT400 and get probate. That is what I have done with 2 estates, both in seven figures, it all went smoothly and the solicitor's fees were just under £2,000 each time. The solicitor is helpful in raising any potential issues and then dealing with the probate office, who are more likely to accept without question forms submitted by a reputable firm.

As for power of attorneys, I had a solicitor do the first lot, cost £400, then I did the next lot myself - very easy.

[taken2often]

You know the score. Ask for a price learn from the process. A funeral could range fromn 1500 to 15,000. The uneral Director likes to visit tomake arrangements to sus out what the market can bare. I bought my funeral 1990 £850 from a sor far reliable Golden Charter. Many new companies have jumped on the band wagon.

[Dod101]

I think many do just hand it over to a solicitor. The estate I mentioned less than 200k. A relative, Qualified Accountant and in general a very smart guy stated he could not have done it. It is just weired, people wait til January and then get accountants to do their self assessment, Pay up to two grand to make out a Power of Attorney. I paid about £85.00 each for the trhree I have done. These are all easy and help is available but concentration and wanting to learn is the starting point.

Have you noticed the recent fad of asking if you want a receipt. This means that thousands do not check their statements, how dumb or lazy is that

Bob

Asking if you want a receipt is not a fad. It is intended to save paper as many people were taking the receipt and throwing it away. I often do not bother with a receipt but I do remember how much it was. I often ask for a receipt if I do a largish shop in a supermarket because sometimes they get things wrong.
Dod

[Lootman]

I think many do just hand it over to a solicitor. The estate I mentioned less than 200k. A relative, Qualified Accountant and in general a very smart guy stated he could not have done it. It is just weired, people wait til January and then get accountants to do their self assessment, Pay up to two grand to make out a Power of Attorney. I paid about £85.00 each for the trhree I have done. These are all easy and help is available but concentration and wanting to learn is the starting point.

Have you noticed the recent fad of asking if you want a receipt. This means that thousands do not check their statements, how dumb or lazy is that

Asking if you want a receipt is not a fad. It is intended to save paper as many people were taking the receipt and throwing it away. I often do not bother with a receipt but I do remember how much it was. I often ask for a receipt if I do a largish shop in a supermarket because sometimes they get things wrong.

Or you may want to return something, for which a receipt is helpful.

As for the cost of "professionals" for probate, I deeply resent the charges being derived as a percentage of the estate value. A 7-figure estate can be simple and a 6-figure estate can be complicated.

[taken2often]

I record daily cash,debit and credit card purchases. At the week end I total and transfer to weekly, at month end and then onto annual. One, I like to know what I am spending and secondly I have proof of annual expenditure for IHT. My estate is going to have to prove excess income over the 7 years.

I think it is a Fad created by the Greens, who have noticed the anti social and the financial illiterates who have not been taught the benefits of checking their statements. They are probably the same ones who allow their friends to hang over them at cashmachines and know their pin numbers. Although they do not need that, just borrow the card and scan it. With or without permission, if you do not check your statements who would know.

Bob

[Dod101]

I record daily cash,debit and credit card purchases. At the week end I total and transfer to weekly, at month end and then onto annual. One, I like to know what I am spending and secondly I have proof of annual expenditure for IHT. My estate is going to have to prove excess income over the 7 years.

I think it is a Fad created by the Greens, who have noticed the anti social and the financial illiterates who have not been taught the benefits of checking their statements. They are probably the same ones who allow their friends to hang over them at cashmachines and know their pin numbers. Although they do not need that, just borrow the card and scan it. With or without permission, if you do not check your statements who would know.

Bob

I too keep a record of my expenditure and in much the same way record my expenses daily. I am now on my own and shop purchases are relatively modest. All done by card and so I can easily remember most purchases usually to the penny and then can of course check via my bank statements. On of the first things i do do most mornings is to check my bank entries.]

Dod

[taken2often]

The smart thing to do
Bob

[Charlottesquare]

I think many do just hand it over to a solicitor. The estate I mentioned less than 200k. A relative, Qualified Accountant and in general a very smart guy stated he could not have done it. It is just weired, people wait til January and then get accountants to do their self assessment, Pay up to two grand to make out a Power of Attorney. I paid about £85.00 each for the trhree I have done. These are all easy and help is available but concentration and wanting to learn is the starting point.

Have you noticed the recent fad of asking if you want a receipt. This means that thousands do not check their statements, how dumb or lazy is that

Asking if you want a receipt is not a fad. It is intended to save paper as many people were taking the receipt and throwing it away. I often do not bother with a receipt but I do remember how much it was. I often ask for a receipt if I do a largish shop in a supermarket because sometimes they get things wrong.

Or you may want to return something, for which a receipt is helpful.

As for the cost of "professionals" for probate, I deeply resent the charges being derived as a percentage of the estate value. A 7-figure estate can be simple and a 6-figure estate can be complicated.

My bugbear was being charged a property sale fee to sell two houses and then have an ingathering percentage charge on the whole estate, it is double charging. (On the plus side the same solicitor charges very little for managing a family life interest trust for the last 8 years, so win some lose some)