Probate for Aunt, estate valuation

[Binuchander]

My aunt recently passed away and has left her estate to myself and my sibling in equal shares.

My uncle (her husband) died in 2004 and at the time his nil rate band (I think it was £300,000) was used in full.

My aunt's only assets are her house (which she used to own with my uncle) and some land abroad (anticipated value approximately £10,000). She had a bank account of which my sister was a joint account holder, but this only had approximately £500 in it on death. No gifts have been made in the last 7 years.

Please can I ask the following questions:

1. Given the above scenario, what entitlement does my aunt's estate have prior to inheritance tax being payable. I am not sure if it is either £650,000 or £675,000.

2. We have had 2 probate valuations of her house carried out by local estate agents. One has come back at £600,000 and one at £650,000. Once probate has been granted, the intention would be to sell the house. Would it make sense to go with the higher valuation in case the property sells for more than the inheritance tax-free amount available to us. Otherwise, if we go for the lower valuation of £600,000 and the house sells for say £630,000, I assume we would be liable for capital gains tax. I wonder whether it may well be that in this scenario we could be better off asking for one of the agents to provide a valuation in between of say £625,000.

Any advice would be much appreciated, thank you in advance.

[Frank1]

IHT nil rate band was £325k in 2004 but you say the nrb was used up meaning your uncle left part of his estate to a beneficiary that wasn't your aunt. Are you sure about this? Have you contacted the executor of his will?
For probate the executor could use the average of the 2 valuations. There may be more IHt to pay if the property sells for more than the average value or a tax refund if it sells for less. There is no CGT to pay.
If your uncle's nrb was used in full your aunt's estate is only entitled to £325k nrb.
If the total of her estate is valued at say £640k IHt works out at £315k x 40%

[Binuchander]

Thank you - am I correct in saying that the Residence nil rate band does not apply in this case as myself and my sister are not direct descendants?

Out of interest (for my own will), in a scenario where One person has died and the nil rate band has already been utilised, am I correct in saying that what remains for the surviving spouse’s estate is:

The surviving spouse’s nil rate band. £325000

RNRB x 2 = £175,000 x 2 =£350,000.00

Total amount available IHT free = £675000?

[Frank1]

Yes to your first question


You are correct with £675k provided your direct descendants are the beneficiaries of your property

[Binuchander]

Thank you - very helpful advice

[Tofros]

I recommend that you take individual legal advice. Estates are liable for CGT on capital gains over declared probate value. You will have to pay any IHT before probate is granted and therefore before you can sell. There is also a time limit for paying IHT, which I think is 6 months after the death, after which interest will be charged. When it comes to selling, estates have a small CG allowance but it only is available for the first and I think second year following the death but there may be benefit in the property being beneficially transferred to the beneficiaries before sale as they together may have a larger CG allowance. As I said, take advice from a probate practitioner who is a member of STEP. I see a lot of complaints about probate delays and it is important to get your application right first time.

[Binuchander]

Please can I ask some further questions:




The relationship between my sibling and I is not good and in the past she has lied about financial matters to me and my Aunt which I only came to find out by accident. We used to have a joint account in which some money was deposited by our late parents for us both- at one point after our parents had died, she tried to take 100% of the proceeds when in reality our parents always intended for us to share the money equally.




My late aunt’s property has been left to us in equal shares and the intention is to sell it once probate has been granted as we don’t wish to have any joint assets.




Please can you advise:

1. If we sell the property after probate has been granted but without assenting the property, what would happen to the proceeds of the sale? Can the proceeds be transferred directly in equal shares to our individual personal bank accounts or would it have to go into the executors’ account? If it goes into the executors’ account, is that treated like a normal shared bank account where either party can withdraw as much money as they wish up to 100%?
2. If we do assent the property, will the solicitor send the proceeds to each of us individually into our personal bank account? Or given that the property is a joint asset, would the proceeds have to go into a joint bank account?
3. If we do choose to assent the property, does it make any difference to the eventual proceeds of the sale if we own it has joint tenants or tenants in common?

Many thanks in advance for any advice offered.

[BlakSheep]

It is my understanding for IHT assessment valuation is based on the value of the house on the date of death. Ideally, best of three valuations and go with the median value. Occasionally the valuation agency may send their own surveyor to assess value if they believe the valuation is way below the market (usually for London properties).

[Binuchander]

Please can I ask some further questions:




The relationship between my sibling and I is not good and in the past she has lied about financial matters to me and my Aunt which I only came to find out by accident. We used to have a joint account in which some money was deposited by our late parents for us both- at one point after our parents had died, she tried to take 100% of the proceeds when in reality our parents always intended for us to share the money equally.




My late aunt’s property has been left to us in equal shares and the intention is to sell it once probate has been granted as we don’t wish to have any joint assets.




Please can you advise:

1. If we sell the property after probate has been granted but without assenting the property, what would happen to the proceeds of the sale? Can the proceeds be transferred directly in equal shares to our individual personal bank accounts or would it have to go into the executors’ account? If it goes into the executors’ account, is that treated like a normal shared bank account where either party can withdraw as much money as they wish up to 100%?
2. If we do assent the property, will the solicitor send the proceeds to each of us individually into our personal bank account? Or given that the property is a joint asset, would the proceeds have to go into a joint bank account?
3. If we do choose to assent the property, does it make any difference to the eventual proceeds of the sale if we own it has joint tenants or tenants in common?

Many thanks in advance for any advice offered.

[Frank1]

If the sale of estate property occurs within a year of the death, the sale price can be substituted for the date of death (probate) value and there may be more IHT to pay.
If the sale occurs after a year of death and the property has increased in value, either the estate or beneficiaries of the property may be liable for CGT.
You stated that you and your sister both want to sell the property. You should ask the executor to sell the property and to add the proceeds of the sale to the estate accounts That way if there is CGT to pay, the money should come from the estate.

[Tofros]

In order for beneficial interest in the property to pass to beneficiaries prior to sale you do not have to formally assent it into your names, you can appropriate it using a deed of appropriation.

You do not say whether the beneficiaries were left the house as a specific bequest, or just share the residue. You do not say who the executors ar, or whether they are professionals, or if lay executors whether professional assistance is being sought. You do not say if there are any debts or liabilities to be paid out of the estate (eg funeral costs, ongoing utility bills) and whether there are sufficient liquid assets to pay for those without recourse to the proceeds of sale of the house. All those factors will have a bearing on the best course of action.

You say that your uncles NRB was used. Are you sure about ｔｈａｔ？　If　ｈｅ　ｌｅｆｔ　ｅｖｅｒｙｔｈｉｎｇ　ｔｏ　ｙｏｕｒ　ａｕｎｔ，ｔｈｅｎ　ｈｉｓ　 ＮＲＢ　ｗｏｕｌｄ　ｎｏｔ　ｂｅ　ｕｓｅｄ. Transfers between spouses were exempt even then I believe。 Again, you would benefit from proper advice.