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Declaration of trust , and house valuations
Hi all,
My sister recently passed away and my mother is going through the probate process (it is only my mother who would inherit in the case, as there was no will). The estate is not very large since she had a bunch of debt and the only significant asset is a house that had a lot outstanding on the mortgage.
The house is worth less than the IHT threshold of £325k, probably somewhere around £200-250k. So my understanding is that she does not need to fill out the IHT 205 form, and can simply fill out the PA1A which includes a section asking about the value of the estate.
So I have a few questions related to this.
Firstly, my mum gave some money (around £70k) to my sister to help her buy the house, but this money was given with a "declaration of trust", as my sister was married at the time (since divorced) and my parents were concerned that they could lose the money if they gave her it as a straight gift and then she or the previous husband incurred significant debts and the house was repossessed.
I found the declaration document, and it essentially says that my parents would be entitled to have the £70k back if the house was sold, and that they would not be able to sell the house without my parents permission. As I understand it, they would simply be entitled to the £70k in a sale and not any "share" of the equity (e.g if the house increased in value).
So when we value the estate on the probate form. Should we take the value of the house and *deduct* the £70k from that valuation, and then deduct the outstanding mortgage balance? E.g say we went with a value of £200k and there is £60k left on the mortgage we would say that value of the house (for the purposes of probate) is:
£200k
- £70k
- £60k
= £70k
Or would we simply deduct the mortgage balance and *not* the amount in the declaration of trust?
Also, I would be curious how this would work for capital gains once the house has been sold?
e.g do we need to consider any increase in the value in the house from the date my sister bought it as an "additional" capital gain, as that was when the money was given? E.g say the house was bought by my sister in 2015 and inherited in 2025? Do you count part of the capital gain as "beginning" in 2015?
Also, a general question about valuations for probate. Is it required to have a RICS surveyor perform the valuation, even if the value is almost certainly below the IHT threshold? I have seen suggestions of getting 3 valuations from different estate agents. We went and got 3 valuations from estate agents, but they all gave the exact same valuation, I then looked on the rightmove valuation estimator (on the website) and that co-incidently also gave the exact same figure. So I'm assuming the agents just used that to produce the valuation..
Would that count as "3 valuations"? I assume it matters less since we are below the IHT threshold, but I suppose it matters a bit for capital gains.
I hope my question isn't too scatter brained.
Thanks
My sister recently passed away and my mother is going through the probate process (it is only my mother who would inherit in the case, as there was no will). The estate is not very large since she had a bunch of debt and the only significant asset is a house that had a lot outstanding on the mortgage.
The house is worth less than the IHT threshold of £325k, probably somewhere around £200-250k. So my understanding is that she does not need to fill out the IHT 205 form, and can simply fill out the PA1A which includes a section asking about the value of the estate.
So I have a few questions related to this.
Firstly, my mum gave some money (around £70k) to my sister to help her buy the house, but this money was given with a "declaration of trust", as my sister was married at the time (since divorced) and my parents were concerned that they could lose the money if they gave her it as a straight gift and then she or the previous husband incurred significant debts and the house was repossessed.
I found the declaration document, and it essentially says that my parents would be entitled to have the £70k back if the house was sold, and that they would not be able to sell the house without my parents permission. As I understand it, they would simply be entitled to the £70k in a sale and not any "share" of the equity (e.g if the house increased in value).
So when we value the estate on the probate form. Should we take the value of the house and *deduct* the £70k from that valuation, and then deduct the outstanding mortgage balance? E.g say we went with a value of £200k and there is £60k left on the mortgage we would say that value of the house (for the purposes of probate) is:
£200k
- £70k
- £60k
= £70k
Or would we simply deduct the mortgage balance and *not* the amount in the declaration of trust?
Also, I would be curious how this would work for capital gains once the house has been sold?
e.g do we need to consider any increase in the value in the house from the date my sister bought it as an "additional" capital gain, as that was when the money was given? E.g say the house was bought by my sister in 2015 and inherited in 2025? Do you count part of the capital gain as "beginning" in 2015?
Also, a general question about valuations for probate. Is it required to have a RICS surveyor perform the valuation, even if the value is almost certainly below the IHT threshold? I have seen suggestions of getting 3 valuations from different estate agents. We went and got 3 valuations from estate agents, but they all gave the exact same valuation, I then looked on the rightmove valuation estimator (on the website) and that co-incidently also gave the exact same figure. So I'm assuming the agents just used that to produce the valuation..
Would that count as "3 valuations"? I assume it matters less since we are below the IHT threshold, but I suppose it matters a bit for capital gains.
I hope my question isn't too scatter brained.
Thanks
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