Inheritance Tax is at present a tax which is relatively easy to avoid, legally, provided you contact our IHT Planning team in good time.  A very low cost initial review can pave the way for massive savings to the benefit of future generations of your family.  But in this case, it was clearly left too late….Or should we say, trying to avoid Inheritance Tax.  The Telegraph reports:

“A 56-year-old woman has been sentenced today to two years in jail having lied to HMRC about the value of assets she inherited after the death of her aunt. She claimed to have inherited £285,000 when the sum was in fact £1.5m.

She also lied about financial gifts made to her by her aunt before her death, the taxman said.HMRC has issued details of the case and conviction to deter others from understating inheritances in order to avoid death duties.Currently estates below £325,000 are not subject to the tax. Assets above that threshold are taxed at 40pc.Married couples or civil partners can add their two “nil rate bands” together, giving a joint allowance of £650,000.

HMRC said that Ms Bunn, from Hassocks, Sussex, confessed, following an investigation, that in addition to understating the value of her inheritance she also “failed to declare substantial cash gifts from her aunt while she was alive”.

Only gifts within certain strict limits are exempt from inheritance tax, unless the person who makes the gifts lives on afterwards for at least seven years.”Main Inheritance Tax page,More on the story. 

Probate question: Is probate needed? “My father who died on Tuesday and left a last will and asking my brother and I to be executors and he has left everything to my mother.Do I need to get the will checked at the Probate office to confirm it is legally correct?  Is probate needed? If it is, go here. The flat, bank accounts, car, policies are in joint names with my mother so do we need to do anything?”

Is Probate Needed?

First point is that you need to make sure the Will and related papers are preserved until after your mothers death, just in case you need to use Dads Nil Rate Band for Inheritance Tax when mum dies. Looking after these papers could just save £100.000 + in Inheritance Tax.There is a fair chance that you may not need to get a grant of probate, but it only takes one awkward bank etc to demand it and you have no choice.Hopefully they will all accept a copy of the Will and the death certificate (get lots).If their home is owned joint tenants (they both owned all of it) then just send the death certificate to the Land Registry and ask for his name to be removed.  If they owned the property in shares (tenants in common) the probate will be needed to transfer ownership.  As the last will is so simple, they are probably joint tenants, which makes it very easy at this stage, but does put the home at risk from Community Care Tax.As long as both your mum and dad are English or Welsh, can’t think of any other problems offhand.Once the dust settles, mum should review her legal planning and get Lasting Powers of Attorney and consider Asset Protection so her whole estate doesn’t go to the Council.I have attached some of our guides for you.Fingers crossed!Steve 

Is Probate Needed?