DIY Probate and Inheritance Tax Danger: We had a call for help the other day from the son of a family who was carrying out the probate work on his mothers estate. In this case, he knew in advance that there would be some IHT due, which is something many people don’t realise as the estate appears to be under the Inheritance Tax threshold of £325,000 (single person) or £650,000 for a couple in 2014/2015.
In this particular case the estate wasn’t especially complicated, but for some reason the Taxman wanted £130,000 more in Inheritance Tax than he should have done.
The son knew all about how IHT was calculated, but regrettably had failed to deal with all the paperwork correctly and it was too late to do anything about it.
So he had saved probably £2,000 to £3,000 in professional fees but lost £130,000.
Dealing with estates where IHT is or may be involved is a dangerous occupation for those who don’t fully understand the topic. Remember that assets which you might consider to be given away could actually remain in the estate for Inheritance Tax purposes.
Not only that, but some gifts made as long ago as 14 years could be included too. This is not at all what the lay executor would think, and there can be large and personal penalties charged against both the executor and the estate. That could mean attempting to get back money already given to other beneficiaries. And if that fails, then the executor may end up paying a personal fine as well as paying everyone elses IHT bill. Not a great way to save money.
So if there is the slightest possibility of Inheritance Tax being involved, we strongly suggest you contact us for professional help. DIY Probate and inheritance tax are a dangerous mix.
We do have an assisted DIY Probate and Inheritance Tax package.