Events
How are digital assets handled in the probate process?
June 7, 2023
As technology advances, digital assets are becoming more and more common, which can complicate the probate process.
Probate, a process that deals with the distribution of a deceased person's estate, has traditionally dealt with physical assets such as properties, money, and personal belongings.
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Read more.Selling property during the probate process
May 26, 2023
Losing a loved one is a challenging and emotional time for families and friends. There is considerable amount of stress just dealing with the passing of a love one and to add to this is paying of inheritance tax within six months of death and completion of the Inheritance Tax return form within 12 months of death.
Amidst the grief, the probate process adds a layer of complexity, particularly when it comes to dealing with property.
You can only sell the property after a Grant of Probate is issued and this is legal document that allows the executor(s) to transfer the property into the beneficiary’s name so that the property can be sold.
Read more.Understanding probate process
The first step in this probate process is to prepare inheritance tax returns to establish the inheritance tax position and the gross and net assets of the estate. HMRC will extract the gross and net assets figures of the estate and will check that the inheritance tax is paid before notifying the Probate Office to commence dealing with the probate application. Please note that the Grant of Probate is not issued until the inheritance tax is paid. The inheritance tax return form shows all the individuals assets and liabilities as at date of death. Therefore, valuations are required as at date of death of shares, bank account and property. Part of the process of reporting a property on the inheritance tax return is having a valuation of the property as at date of death which is required. We would recommend that this is done by a Royal Institute of Chartered Surveyors (RICS) qualified surveyor as HMRC uses people with the same qualification to review the valuations when submitted to them. Depending on the Will, who is inheriting and what assets are being inherited will determine the amount of inheritance tax to pay. However, if the will is not tax efficient a deed of variation can be made to reduce the amount of inheritance tax paid. This process can be difficult, so it is important to understand all the steps you need to take with help from an expert.After the Grant of Probate is issued:
Please place an advert in the London Gazette and local paper as soon as possible. Placing a deceased estates notice demonstrates that enough effort has been made to locate creditors before distributing an estate to its beneficiaries (the people who will inherit the estate). This protects the executor from being personally responsible for money owed to any unidentified creditors. Once the deceased estates notice has been placed, creditors have two months and one day to make a claim against the estate. Depending on the Will the executor can use the Grant of Probate to transfer assets into beneficiaries’ names or assets can be put into executor’s names and sold with the proceeds collected in an executor account. After the assets are collected and debt payments of the estate have been made, the remaining balance can be split between the beneficiaries according to the Will. An estate accounts produced which can be presented to the courts if requested. For more advice on the above, get in touch with our experienced probate team for advice. We can also provide probate guide which covers all aspects of the probate process by emailing contact@grunberg.co.ukInheritance Tax planning – What should you consider?
March 24, 2023
Inheritance tax (IHT) is a tax that is levied on the transfer of assets after someone dies.
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Read more.Inheritance Tax – Maximising the wealth your loved ones receive
January 31, 2023
If you have a large estate and are a high-net-worth individual, Inheritance Tax (IHT) could impact your loved ones hugely, when it comes to your estate being passed down and the amount that they will receive when you pass away.
How does Inheritance Tax work?
Inheritance Tax applies on the estate of someone who has died when at least part of the estate exceeds the tax-free threshold of £325,000 (now frozen until April 2028). This usually consists of property, investments and general savings.
The Inheritance Tax rate is 40 per cent, charged on any of the estate that exceeds £325,000.
If you are a high-net-worth individual and believe your beneficiaries will be charged Inheritance Tax after you have passed away, it is important to understand what they will pay and if there are any ways to plan for this and mitigate the costs in any way.
Understand the value of your estate in advance
Having an accurate idea of your estate value will help you to understand how much Inheritance Tax your beneficiaries are likely to pay.
Remember to account for any debts and funeral expenses when you are working out your estate’s value. It is also beneficial to review this regularly, as the value of your estate is likely to increase over time.
Leaving your property to your spouse/civil partner
If your property is left to your civil partner or spouse, they will not pay any IHT and this is applicable across all assets you leave to your spouse or civil partner.
However, if you leave the property to anyone else in your Will, then they may have to pay IHT, if the estate surpasses the threshold.
Residence nil-rate band
If you own a property, you can apply this additional IHT to the threshold of £325,000. This means that the overall allowance is increased to £500,000 but you must meet certain criteria for this.
You must have lived in the house at some point, after 8 July 2015.
And you must leave the house to a direct descendant, like your children, grandchildren, stepchildren etc.
If the value of your estate surpasses £2 million, then RNRB is tapered.
RNRB decreases by £1 for every £2 that your estate is above £2 million.
If you leave your entire estate to a spouse, then you won’t make use of your nil-rate band and your spouse’s tax-free allowance will double to £650,000.
Similarly with the RNRB, if this is unused, your spouse will have £350,000 added to their tax-free allowance. This is largely only useful if your property is worth £350,000 or more.
We can offer expert guidance on IHT and how to maximise your estate for your loved ones, contact us for advice.
Read more.Have you thought about Inheritance Tax?
January 17, 2023
Inheritance Tax in 2021-22 was £6.1 billion, a £729 million increase from £5.4 billion the year before.
What is Inheritance Tax?
IHT is a tax on the estate (the property, money, and possessions) of someone who’s died above a set of thresholds, known as the nil-rate band and residence nil-rate band.
The tax is paid by the estate but affects the amount beneficiaries could receive.
How may you be affected by Government changes?
Families paid out £326 million more in Inheritance Tax (IHT) last year after HM Revenue & Customs implemented more rigorous checks on underpayments. Investigators raised 28 per cent more in the 2021-2022 tax year than in the year before. HMRC launched 4,258 investigations in 2021/2022 to recover unpaid tax from bereaved families.
The amount paid in IHT is rising as the £325,000 nil-rate band threshold has not increased since 2009.
Similarly, the residence nil-rate band threshold of £175,000 also hasn’t increased.
One in 25 estates is liable for IHT and it is estimated that this figure will rise.
Who is responsible for paying Inheritance Tax?
If there is a Will, the Executor will be responsible for paying IHT. The Beneficiaries of a Will do not pay IHT on what they inherit, but may have to pay taxes on rental income if they inherited a house.
How can you mitigate Inheritance Tax?
IHT can be reduced through a variety of methods.
If you give gifts of up to £3,000, this will be tax-free and under annual exemptions. For example, this may include payments to help with living costs or birthday gifts.
If you give gifts of £3,000 or more, these may be subject to the seven-year rule meaning these gifts will count towards the value of your estate.
If you die within seven years of gifting, then the gift will count towards your nil-rate band meaning it may be subject to IHT.
You will pay less IHT, the longer you live after the gift is made and you could be charged IHT if you give away more in the seven years before your death.
You may also choose to give away gifts to charity which can help mitigate Inheritance Tax. If you choose to give away gifts to charity, equal to 10 per cent or more of your estate, you only pay IHT at a rate of 36 per cent.
Other ways which may allow you to lower your IHT liability include trusts, Business Property Relief, and Agricultural Property Relief.
If you need advice on Inheritance Tax or probate-related matters, contact us today.
Read more.When do you have to pay Inheritance Tax?
July 25, 2022
Considering what will happen after you have passed away is not the happiest subject, but it is necessary to consider how to ensure your loved ones are well looked after.
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Read more.How to minimise Inheritance Tax bills as house prices surge
July 6, 2022
More and more people are being drawn into paying Inheritance Tax (IHT), as the price of property soars.
This is because former Chancellor Rishi Sunak froze the nil rate thresholds for paying the tax at £325,000 until 2026, while the value of homes has rocketed, potentially drawing more people into paying the tax.
There are some exceptions, which are listed below, but generally, people are then faced with paying 40 per cent IHT on anything gained over the £325,000 figure.
How much do I have to pay?
IHT is levied at 40 per cent on everything in an individual’s estate at their death above the Nil Rate Band of £325,000.
However, many taxpayers also benefit from the Residence Nil Rate Band, which adds an additional allowance of £175,000 for their main property if it is passed to direct descendants.
If you are married or in a civil partnership these allowances can be passed to a spouse or partner once the other person dies.
According to the Office for National Statistics (ONS), in 2009, the average price of a home in the UK was £227,000. In 2021 that had rocketed to £327,000, £2,000 above the initial Nil-Rate band.
In high-value areas, such as the South East and London, this figure is even higher and it means that more and more taxpayers – and not just the wealthiest members of society – are facing IHT bills on their estates after death.
What is IHT?
Inheritance Tax is a tax on the estate (the property, money and possessions) of someone who’s died.
As mentioned, there is normally no Inheritance Tax to pay if:
Read more.- The value of your estate is below the £325,000 threshold
- You leave everything above the £325,000 threshold to your spouse, civil partner, a charity or a community amateur sports club
- If you give away your home to your children (including adopted, foster or stepchildren) or grandchildren your threshold can increase to £500,000
- If you are married or in a civil partnership and your estate is worth less than your threshold, any unused threshold can be added to your partner’s threshold when you die.
Growing number of unmarried over 70s at risk of hefty Inheritance Tax bills
June 10, 2022
A growing number of over 70s could be at risk of large Inheritance Tax bills due to their lack of marital status.
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Read more.Warning issues about complex probate cases following a rise in disputes
April 8, 2022
Experts are warning that a post-Covid rise in disputed wills is evidence that not enough estates are getting professional advice when it comes to complex probate cases.
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Read more.A guide to Probate, Wills, and Inheritance Tax
August 13, 2021
Preparing your estate for your death can sometimes be a challenging process, but it is important that the right plans and a Will are put in place to ensure your wishes are met. (more…)
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