Inheritance Tax: This is another aspect of the probate process that has caused us sadness. It also makes us feel like inheriting what has been passed down to you can be more hassle than it’s worth….
- Our Inheritance Tax Experience
- Inheritance Tax Definitions
- Inheritance Tax for Expats
- Inheritance Tax Scenarios
- Funeral costs – if you have no money for a funeral
- Potential ways to avoid paying Inheritance Tax
- Our Final Thoughts
© Copyright 2019 Grief Probate Journey Blog *PLEASE NOTE THIS INFORMATION IS BASED ON UK LAW: IT ALSO INCLUDES INFORMATION FOR UK EXPATS*
Please see below information on UK Inheritance Tax and Inheritance Tax for Expats. This information was gained through Google searching, as well as based on our own experience. This topic will cover the following areas:
1. Our Inheritance Tax Experience
Inheritance Tax: This is another aspect of the probate process that has caused us sadness. It also makes us feel like inheriting what has been passed down to you can be more hassle than it’s worth. It’s soul destroying knowing how much of your loved one’s money can potentially go back to the government.
In our situation, our parents were divorced. Our Dad had a will, but it wasn’t signed. Judging by the many errors in the paperwork our Dad was expected to sign, we can see why he didn’t.
With that being our situation we decided to try and locate the Solicitor of the unsigned will in case there might have been a signed one that we did not come across.
We were lucky enough to locate them, and they were still in operation. Unfortunately, there was no additional signed will. It just so happened that we spoke to the head of wills, and one of the partners in the company. We were given their business card before we left.
We tried to do further investigations to see if there was another will signed, unfortunately, we didn’t have enough time to follow this through. We knew we needed to appoint a probate solicitor and fast, we decided to go with the place where the will wasn’t signed. We decided this for these reasons:
- They were honest in seeing why my Dad wouldn’t have signed the will at that time
- We got a good feeling from whom we had spoken too
- We didn’t have much time to research alternatives
This might not have been the decision, unfortunately for us, time was never on our side. And so this was the choice we made.
In life, you can never really know who you can trust or how a certain situation will work out. You can only go with your gut based on all the information and research that you conduct and hope for the best. This is what we have and continue to try and do throughout this process.
Communication is KEY. Try your best to keep in contact with your Probate Solicitor and all other organisations involved. This is in the hope you won’t be faced with unnecessary unexpected surprises.
2. Inheritance Tax Definition(s):
“The standard Inheritance Tax rate is 40%. It’s only charged on the part of your estate that’s above the threshold. Example Your estate is worth £500,000 and your tax-free threshold is £325,000. The Inheritance Tax charged will be 40% of £175,000 (£500,000 minus £325,000)”.
“In the 2019/20 tax year, everyone is allowed to leave an estate valued at up to £325,000 plus the new ‘main residence’ band of £150,000 giving a total allowance of £475,000 per person. For estates valued under this, their beneficiaries won’t pay inheritance tax“.
“Everyone in the 2019-20 tax year has a tax-free inheritance tax allowance of £325,000 – known as the nil-rate band. The allowance has remained the same since 2010-11. The standard inheritance tax rate is 40% of anything in your estate over the £325,000 threshold”.
2.1 Who pays Inheritance Tax?
“If there is a will, it’s usually the executor of the will who arranges to pay the Inheritance Tax (IHT). If there isn’t a will, it’s the administrator of the estate who does this. IHT can be paid from funds within the estate, or from money raised from the sale of the assets”.
“The standard Inheritance Tax rate is 40%. It’s only charged on the part of your estate that’s above the threshold. Example Your estate is worth £500,000 and your tax-free threshold is £325,000. The Inheritance Tax charged will be 40% of £175,000 (£500,000 minus £325,000)”.
2.2 Inheritance Tax Instalment payments:
“In yearly instalments. You can pay your Inheritance Tax on things that may take time to sell in equal annual instalments over 10 years. You must say on Inheritance Tax Account form IHT400 if you want to pay in instalments. You’ll usually have to pay interest on your instalments”.
In our case, we got the shock of our life when it was made clear to us that we the family were expected to pay this Tax. We were fortunate enough that there were funds in the Estate that covered the cost of the first instalment payment. The remainder would be paid over a period of 10 years in yearly instalments with interest. But it is something that we really were not prepared for.
Despite making it clear to the various organisations we deal with that:
- This is all new to us
- It is not our every day and so we do not know what we are doing
- We are in this situation through circumstance, not a choice
It makes no difference in their efforts to help you. Therefore, this is why we advise that knowledge is key. It is also very important to ensure you get a clear explanation from your Probate Solicitor of the stages that are involved and what might be required of you during this process.
It is advisable to bear in mind that Solicitors are not really able to give an exact time frame for completion as they themselves are also reliant on external organisations and their timeframes when dealing with your matter.
3. Inheritance Tax for Expats
“UK inheritance tax for expats is chargeable, on worldwide assets, at a rate of 40% of the amount by which the total value of an expat’s worldwide estate exceeds their nil rate band, which is £325,000 in the current tax year for individuals, or £650,000 per married couple. 9 May 2017″.
- Inheritance Tax advice for expats and non-UK residents
- A guide to Inheritance Tax
- when someone living outside the UK dies
- Expat Wills – What you need to know
The probate process has different outcomes depending on individual circumstances. Below are some examples of:
4. Inheritance Tax Scenarios
4.1 Deceased was married with children- money/properties go to the spouse
“People who are married or registered civil partners do not have to pay any Inheritance Tax on money or property left to them by their spouse. The rules for couples mean it is usually best for them to leave everything to each other. Everyone can leave up to £325,000 free of IHT”.1 Jun 2016.
4.2 Deceased was divorced with children. And no signed will.
“When a person dies without leaving a valid will, their property (the estate) must be shared out according to certain rules. A person who dies without leaving a will is called an intestate person. Only married or civil partners and some other close relatives can inherit under the rules of intestacy.”.
4.3 What happens when someone dies with no will UK?
“When a person dies without leaving a valid will, their property (the estate) must be shared out according to certain rules. … A person who dies without leaving a will is called an intestate person. Only married or civil partners and some other close relatives can inherit under the rules of intestacy.”.
4.4 Who is entitled to see a will after death UK?
“Any Will that the deceased had written previously will remain private. Additionally, if a Grant of Probate is not required, the Will remains private. The Executor can choose to share the Will with the Beneficiaries named in the Will, but it would not usually be seen by anyone who is not named in the Will”.
5. Funeral Costs:
5.1 Deceased has no savings or Estate funds/properties etc. Is next of kin responsible for funeral costs?
“If the estate of the deceased cannot cover the funeral costs and there are no friends or family willing or able to arrange this, then the council will pay for a simple cremation ceremony, but no funeral service will be held”. 31 Aug 2018.
5.2 What happens if you have no money for a funeral?
“If you get a Funeral Payment, you’ll usually have to pay the government back from any money you get from the person’s estate, such as their savings. You can also get up to £700 for any other funeral expenses, such as funeral director’s fees, flowers or the coffin”
5.3 Further useful links are listed below:
- Who can inherit if there is no will – the rules of intestacy
- Who pays for funeral costs if there is no money?
- who is responsible for funeral costs?
- Debt when someone dies
- Sorting out the Estate when there isn’t a will
Please see various links below for information on Inheritance Tax in the United Kingdom (UK).
6. Potential ways to avoid paying Inheritance Tax:
6.1 Inheritance Tax, and Ways to avoid Inheritance Tax:
- The 10 best ways to avoid Inheritance Tax
- Gov.uk – Inheritance Tax
- Overview of Inheritance Tax
- A Guide to Inheritance Tax
- Inheritance Tax Planning: Rates and Advice – Money Saving Expert
- Inheritance Tax reduced rate calculator
- Pay your Inheritance Tax
- Inheritance Tax – Thresholds – Rates and who pays
6.2 Inheritance Tax and Property:
6.3 Inheritance Tax and: Gifts/Trusts/Taxes:
- Trusts and taxes
- Planning – using a trust to avoid Inheritance Tax
- Taxes on money, property, shares you inherit
- Gifts
6.4 Inheritance and Marriage/stepfamilies/Married Couples/Civil partners:
- Marital status and Inheritance Tax
- Inheritance and stepfamilies – Family lives
- Are Inheritance Tax Rules Different If You’re Married?
- Married Couples and Civil Partners – Inheritance Tax
7. Our Final Thoughts
The best advice we could give regarding Inheritance Tax is, gain as much knowledge on the matter from now. This way you will be able to set things up/get things in place from an early stage.
Grief Probate Journey 
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