Reply to: Bit of a crappy situation

[d000hg]

What does confuse me is why is your grandfathers estate going to the sister in law. Once your father died that estate would normally go directly to the grand children

Short answer: because that's what his will says

Longer answer: when my father was diagnosed with terminal cancer a few years back, my grandfather initially wished/assumed that his estate should go to his line i.e. his father's children aka me. He either changed his will accordingly or found he didn't need to.
However my father, while still able to do so, objected. He made it clear his wishes were for his wife to stand in his stead in terms of inheriting, so she would have no needs when he was gone. Grandfather changed his will accordingly.
Mum realised that she had actually been left fairly well off anyway - her income from inheriting my father's pension was enough to live off and although most of their estate is property she had a reasonable nest-egg. So she started investigating a 'deed of variation' to redirect a portion of grandfather's estate directly to me, basically to avoid IHT and on the basis I could use it more than she could.
Which makes the way things played out rather amusing, in a dark way.

[TheFaQQer]

I read it as tax chargeable is reduced by 100%

Yes, I re-read it more carefully and edited accordingly

[TheFaQQer]

When you are writing to HMRC, explain the situation and make sure that your solicitors arranges for your grandfathers estate to come to the next in line (hopefully you). If your solicitor says otherwise, find a new solicitor.

You don't need to do anything - the estate passes to whoever the mother leaves it to, with no tax to pay on the part of the estate already inherited in the past year that has already been taxed.

[mudskipper]

The relevant law is here - you need to look at section 141 at the start of chapter V.



Not sure if that means you still pay 100% of the tax because it's less than a year, or if you get 100% relief because it's been less than a year

I read it as tax chargeable is reduced by 100%

[jamespoole]

Sorry for your loss OP, im sure this is the last thing you want to be thinking about at this time.

Having worked on Probate and Bereavement cases in the past, its not an uncommon issue. Usually it is the deceased's partner who passes away whilst waiting for the estate to be settled. Allowances will still apply to any deceased member, meaning the two estates go into one. I remember dealing with a young guy who had lost both of his parents and his one remaining grandparent in one car crash. All of the allowances were separated for his inheritance

When you are writing to HMRC, explain the situation and make sure that your solicitors arranges for your grandfathers estate to come to the next in line (hopefully you). If your solicitor says otherwise, find a new solicitor.

[TheFaQQer]

For those interested, I was passed this by a friendly IFA which looks quite promising though I haven't read it in detail yet.

Quick succession relief: summary

The relevant law is here - you need to look at section 141 at the start of chapter V.

(1)Where the value of a person’s estate was increased by a chargeable transfer (“the first transfer”) made not more than five years before—

(a)his death, or

(b)a chargeable transfer which is made by him otherwise than on his death and as to which the conditions specified in subsection (2) below are satisfied,

the tax chargeable on the value transferred by the transfer made on his death or, as the case may be, referred to in paragraph (b) above (“the later transfer”) shall be reduced by an amount calculated in accordance with subsection (3) below.
(2)The conditions referred to in subsection (1)(b) above are—

(a)that the value transferred by the later transfer falls to be determined by reference to the value of settled property in which there subsists an interest in possession to which the transferor is entitled;

(b)that the value transferred by the first transfer also fell to be determined by reference to the value of that property; and

(c)that the first transfer either was or included the making of the settlement or was made after the making of the settlement.

(3)The amount referred to in subsection (1) above is a percentage of the tax charged on so much of the value transferred by the first transfer as is attributable to the increase mentioned in that subsection; and the percentage is—

(a)100 per cent. if the period beginning with the date of the first transfer and ending with the date of the later does not exceed one year;

(b)80 per cent. if it exceeds one year but does not exceed two years;

(c)60 per cent. if it exceeds two years but does not exceed three years;

(d)40 per cent. if it exceeds three years but does not exceed four years; and

(e)20 per cent. if it exceeds four years.

Edit - that's clear enough: "the tax chargeable on the value transferred by the transfer made on his death or...shall be reduced by...100 per cent" so no tax to pay.

[vetran]

sorry to hear of your loss.

No experience of this so I'll keep my random utterances to myself.

[eek]

As the first estate is not settled surely the first thing anyone would suggest is to do a deed of variation on that will to bypass the original benefactor and send everything directly to the next generation.

That tax relief relates to after the original estate is settled.

What does confuse me is why is your grandfathers estate going to the sister in law. Once your father died that estate would normally go directly to the grand children

[mudskipper]

For those interested, I was passed this by a friendly IFA which looks quite promising though I haven't read it in detail yet.

Quick succession relief: summary

Does look hopeful - let us know how it goes.

[d000hg]

For those interested, I was passed this by a friendly IFA which looks quite promising though I haven't read it in detail yet.

Quick succession relief: summary

[EternalOptimist]

I'm not an expert or a lawyer, but based on this
Probate and estate administration FAQs | Law Donut

It would appear that the benefit from your grandfathers estate passes to you, so it never forms part of your mothers estate so would not be taxed as such.

I am dubious. An executor is not neccessarily a beneficiary

[mudskipper]

I'm not an expert or a lawyer, but based on this
Probate and estate administration FAQs | Law Donut

It would appear that the benefit from your grandfathers estate passes to you, so it never forms part of your mothers estate so would not be taxed as such.

Unfortunately, I think that that is talking about beneficiaries that have died before the deceased. IIRC, there is often something in the will that says the beneficiary has to survive the deceased by 28 days to be a beneficiary.

[TheFaQQer]

I'm not an expert or a lawyer, but based on this
Probate and estate administration FAQs | Law Donut

It would appear that the benefit from your grandfathers estate passes to you, so it never forms part of your mothers estate so would not be taxed as such.

I read that as "if a beneficiary of the will has died when this person dies" rather than "if a beneficiary dies during the probate process".

One for the professionals.

[d000hg]

Yeah, I've heard two different versions:

a)If the beneficiary dies pre-dismemberment (no idea if these are the proper terms) their share of the estate 'jumps' to whoever is next-in-line based on my grandfather's will. This would clearly be ideal since his estate is nearly wound up and would therefore not get taxed twice

b)what they stood to inherit becomes part of their estate and is treated exactly as if they received it before dying. I wasn't aware a dead person could inherit anything though, maybe it depends where the solicitors had got to.

However I also came across mention that you can apply for relief when there is a very short gap between deaths on grounds HMRC have already had "their bite of the cherry".

Conflicting advice even from people who work in this area so far! As mentioned, my mother inherited my father's tax-free allowance because spouses get special exemptions. That (~600k) is what her estate is roughly worth before grandfather's estate is taken into account. His estate attracted a small amount of tax when going to her, which means ALL of it would be taxed at 40% potentially.

[SimonMac]

I'm not an expert or a lawyer, but based on this
Probate and estate administration FAQs | Law Donut

It would appear that the benefit from your grandfathers estate passes to you, so it never forms part of your mothers estate so would not be taxed as such.

Read the small print

If the potential beneficiary was not a child of the deceased, or had no surviving children when the deceased died, then they normally lose their entitlement to inherit.

It was her husbands father, I think that adds complexity