Assets inside or outside estate?

[Rushy]

My father died intestate in 2017. We had LoA drawn up and settled everything about three years ago. We accepted that inheritance was due 50/50 but agreed by deed to vary the division of assets - approx 80/20 in favour of my sibling. The 80 to them was mostly property and the 20 to me was the savings and investments from his estate.

Several years later I have been contacted by a finance company to say that they have a small bond held in my father's name. It would appear that my sibling has always been aware of this bond and alerted them to my father's death and began correspondence with them within a couple of weeks of his death. They never mentioned it to me or the solicitors doing probate.

Under the terms of the deed the bond would accrue wholly to me. But it was not included because it was not declared. But also the finance providing the bond company has give two differing accounts of how it should be treated.

The bond is not held in a trust but its nominated payee is "my children in equal parts". In one account they have said that bond falls outside the estate because it is under 5K and because of the nomination it must be distributed directly 50/50 outside the estate. In the other account they say that because it is not held in a trust, and the nominees are not named individuals, it must fall to the estate. In which case it would accrue to me according to our deed.

I am planning on writing to the company to ask for their written clarification but also would appreciate any guidance anyone can provide.

[dslippy]

First and last, talk to your brother.

Second - check the wording of your agreement. Didi it limit itself to assets within the estate?

[Rushy]

First and last, talk to your brother.

Second - check the wording of your agreement. Didi it limit itself to assets within the estate?

I think we are both agreed that if it falls within the estate it accrues to me and that if it falls outside it will be split 50/50. It seems pretty unlikely that they would challenge this by claiming that it was not included in the original list of assets since we both declared in the deed that we knew of no other assets at the time the list was compiled. It is now clear that that they did know about this (as they had commenced correspondence with the bond company before probate had even begun).

What is not clear to me is whether it falls within the estate. My sibling is convinced it does not (though unable to clarify the basis for this belief) and so should be split 50/50. Different representatives of the bond company have said both that it falls in and that it falls outside the estate, for the reasons explained above. I'm hoping someone might provide guidance on whether it is likely to fall in or out.

[Sam101]

As the Bond was set up for the benefit of the children in equal parts then the company should be able to provide you with the full details of the bond and how it is treated as part of an estate. Special investments such as this will have clear information that has been approved and this is what you need to get hold of.

Once you have the document, then you will be in a position to discuss this with the tax office in more detail.

[Rushy]

The company have now written clarifying their information. Because the investment was not held within a trust it does fall within the estate. They are still allowed to distribute amounts up to £5,000 in total directly to the recipients without going through the administrators but it does not change the fact that it is technically part of the estate.

[Sam101]

That sounds right. Is the £5000 related to the 5% annual withdrawals that are not taxed?

If the Bonds have performed well than no need for change, but it may be that the investments within the Bond need not continue as originally arranged. It's up the the appointed representatives to deal with it as they wish.