IHT liability if family of deceased can't pay

[bb41]

This problem is a little complex and something that has not happened yet so please bear with me .

My Father in Law died last year and his eldest son tried to do probate without a solicitor ..not too much of a problem perse but he does think he knows everything and yet in reality not a lot . After 4 months he'd caused more problems than he solved and after much huffing and puffing used a solicitor who I have used many times for many years .

FIL left no will and the property he lived in was not registered, has an agricultural tie and is in a terrible state of repair .. new roof , re-wiring, new water treatment , all windows have rotted away and 6 acres of land full of dumped cars and contamination . Mil still lives there but has let eldest son do the probate .

My problem is that solicitor wanted a valuation for the property and as I have been through this before I know they suggest a valuer rather than an estate agent , but son has got 3 estate agents none of which have any knowledge of agricultural properties .

The valuations ranged from 500k to 800k., I even thought the 500k valuation was well over what I'd value it at . Tomorrow all the valuations will be taken to the solicitors office to send off to the probate registry

Now here is my problem , if the property is recorded for probate at for arguments sake 700k and agreed then what will happen when MIL passes?. She is in her 80's in poor health again with no will so no IHT is due at this point as it will all go in her name .

If the value of 700k is recorded in the probate value on FIL estate I presume unless the property is sold and an actual value can be established then the 700k will be the starting point when MIL passes and IHT will be a factor.

My problem is that if that's the case then at current IHT threshold there would be a substantial IHT bill to be paid within 6 months of MIL's passing. The estate would never be able to pay this as there is no money as in cash in bank, just the house which would be an absolute nightmare to try and sell

The other siblings have no money and the only one with a house is heavily mortgaged. This is my second marriage and my house is mine bought and paid for by me . If the IHT can't be paid from the estate within 6 months I understand the tax can be paid in monthly instalments but even that is going to be difficult fo everyone .

My question is if the payments weren't covered or not paid at all, would I be liable for any of the IHT as I'm married to a beneficiary ?

[des8]

Where property is sold during the period of administration of an estate and the price obtained is less than the value attributed to that property immediately before death, IHTA 1984, s 191 recognises that it would be unfair to tax the deceased’s estate on the higher value and substitutes the lower sale price if certain conditions are satisfied. The principal condition is that the sale should take place within four years of death (IHTA 1984, s 197A).

Two other conditions are that the estate should not be an exempt estate, and that the sale must not be made to a person who at any time between the death and the sale has been beneficially entitled to the property, or to an interest in possession in the property, or to persons or trustees connected with that person, or in other circumstances as defined by s 191(3).

[bb41]

That is interesting as it was another question I was about to consider asking.... my husband and I believe that the son in charge will want to buy the property at the lower rate with an attempt in time to try and remove the tie attached so you have answered my other question .

We know he was trying to move in on the pretext that MIL could stay in the property and do the repairs on the understanding the property will be left to him solely.

I just don't want to be made liable for any future IHT when the family won't be able to pay it within a 6 month time frame . I have enough paying my own tax without being liable through marriage for someone else

[des8]

I doubt you personally have anything to worry about.
It is for the executor/PR to find the money to pay the taxman (either his own pocket or a bank loan!) or payment by instalment by agreement.
An article you might find useful: http://www.telegraph.co.uk/finance/p...can-we-do.html

[bb41]

yes that helped a lot and eased my concerns ... when I dealt with both my parents wills and probate , our family solicitor said the tax office will agree a surveyors valuation a lot more than an estate agent and would always use the lowest valuation and hope to an agreement for tax purposes.

In my case the property was sold for slightly lower than the surveyors value and the overpayment of tax was returned and thankfully my late parents made provisions for IHT to be paid from the estate. Something I can't thank them enough for as it eased a lot of worries especially as I am an only child .

Thanks Des your links and response was really helpful. all cleared up in a couple of hours...what service as usual from LB's