Rising Property Prices May Mean More will Pay Inheritance Tax

The rise in property prices in the past year may have an effect on the number of people who have to pay inheritance tax, experts have warned. House prices have reportedly increased by 8.9% in the past year. This may mean that more will pay inheritance tax when someone leaves them property in their Will.

New figures from HMRC show that inheritance receipts in April to May 2021 were £966million – £340million higher than the same period last year, due in part to an increase in the value of many people’s homes.  

Financial advisers say significant increases in property values may mean that more estates will nudge past the threshold where inheritance tax is due, without them realising it.   

Current rules state that if you give away your family home to your children, £500,000 is the maximum value that your estate can reach before you start being liable for inheritance tax – or up £1million if you are a surviving spouse or civil partner who already inherited the property from them.

If you do not fall into this category, your limit is £325,000. This is the standard nil-rate band. The nil rate band is the threshold above which Inheritance Tax is payable.

Why More Will Pay Inheritance Tax

Inheritance tax (IHT) is payable at 40 percent on the value of an estate above a certain threshold of a person who has passed away. To avoid taxation as much as is legally possible, many people choose to take preventative action before they pass away.

In England and Wales, if an Estate is worth more than £325,000 when a person dies, then they typically have to pay Inheritance Tax. Currently, the Inheritance Tax rate is 40% on anything above the threshold. If a person leaves more than 10% of the estate’s value to charity, then the rate may reduce to 36%.

If inheritance tax is payable

The grant of representation will not usually be issued until the inheritance tax (IHT) has been paid to HMRC. This can potentially cause a delay in the administration of the estate.

You usually have to pay 10% of the tax due on the value of property and shares plus all of the tax due in respect of the rest of the estate. This tax payment should be made within six months of death. The additional tax is payable in yearly instalments over a ten-year period, or as soon as they are sold. Interest will start to accrue on any outstanding inheritance tax after six months from the date of death.

Due to the rise in house prices in 2020-2021, it may mean that more will pay Inheritance Tax.

How We Can Help

Here at The Inheritance Experts we work with solicitors who have years of experience dealing with inheritance claims. This includes inheritance tax matters. Contact us today by filling in our contact form. Or call us on 01614138763 to speak to one of our friendly knowledgeable advisors.

Unofficially Adopted Children Treated Unfairly in Inheritance

In 2021, a typical family does not exist in the way that it used to. Every family is different; some people remarry, have stepchildren, adopt children. However, the laws surrounding inheritance do not reflect this. According to reports, unofficially adopted children are treated unfairly in inheritance matters. This is because there are certain rules surrounding inheritance tax depending on your relation to the deceased.

Different Rules for Unofficially Adopted Children

One of the rules that is different for children related by blood and unofficially adopted children is the Residence Nil Rate Band. With the Residence Nil Rate Band, each individual has an allowance regarding inheritance tax. Currently, the value is £325,000 – but if you have a property or if you have owned a property, and in your will, you leave your estate to your direct descendant, then you may claim an additional threshold before inheritance tax of £175,000, bringing the total allowance to £500,000. You do need to meet other certain criteria to claim this extra allowance.

However, the Residence Nil Rate Band – although it includes stepchildren or foster children – excludes people who have not got children but want to leave it to nieces and nephews or persons who they view as a child.

This means that unofficially adopted children must pay more inheritance tax than children or stepchildren.

Dying Intestate

There are also problems when someone dies without making a will – also known as Intestacy Rules.

If this is the case, it completely and utterly excludes unofficially adopted children and even stepchildren. If you die without making a will, you must follow the Intestacy Rules and that does not even include stepchildren. 

Inheritance Act Claims for Unofficially Adopted Children

The Inheritance (Provision for Family and Dependants) Act 1975 states that it is

“An act to make fresh provision for empowering the court to make orders for the making out of the estate of a deceased person of provision for the spouse, former spouse, child, child of the family or dependant of that person; and for matters connected therewith.”

Put simply, this act ensures that when a person passes away, every beneficiary receives part of their estate. A beneficiary is anyone who receives anything in a Will.

Certain people, if a Will does not include them, and they believe it should, may be able to make an Inheritance Act claim. So if they believe that they were wrongly left out of a Will, they may be able to make a claim.

How We Can Help with Unofficially Adopted Children being Treated Unfairly in Inheritance

Here at The Inheritance Experts we work with solicitors who have years of experience dealing with inheritance claims. This includes claims for unofficially adopted children being treated unfairly in inheritance. Contact us today by filling in our contact form. Or call us on 01614138763 to speak to one of our friendly knowledgeable advisors.

Manager Fined After Firm Took on Probate Matter with No Experience

The compliance officer and manager of a firm has to pay a fine of £2,000 after the firm took on a probate matter with no experience. The Solicitors Regulation Authority (SRA) imposed the penalty after the solicitor showed a ‘disregard for his regulatory obligation to exercise proper management’ over the business. This lack of control and oversight allowed for almost £58,000 in client monies to be held without the firm even having a secure client account.

In December 2017 the firm began work on a probate matter despite having no prior experience. The fee-earner assigned to the work had never handled a probate matter previously.

No file reviews were completed by any manager at the firm and there was no due diligence of any client. It was not spotted that the estate of the probate matter had debts of £6,000 before estate monies were distributed to beneficiaries, and potential beneficiaries with equal or greater claims to the estate were not identified. A total of £37,600 of estate monies were paid out to several third parties inappropriately, including payment of hospital bills for relatives of the deceased.

probate matter with no experience

What is Probate?

Probate is the legal and financial process that deals with the property, money, and possessions of someone when they die. When a person dies, before the executor of their Will can distribute their estate, they must apply for probate. After the court grants probate, the next of kin or executor can then deal with the deceased’s assets.

The Process of Probate

The process of probate often involves a lot of complicated tax, legal and financial work. Therefore, it breaks down into five stages.

  1. Identifying all the deceased’s assets and liabilities to determine the value of the estate.
  2. Paying inheritance tax and applying for the Grant of Representation.
  3. Selling the deceased’s assets, paying liabilities, and accounting to HMRC for any further tax due to or from the estate.
  4. Preparing estate accounts showing all payments, and showing the balance left for the beneficiaries. Sending the accounts to the executor for approval.
  5. Transferring the assets that the beneficiaries wish to keep, and distributing the Estate.

Probate is required in England and Wales when the deceased owns property. This includes houses, buildings, and land. When a bank or financial institution requests a Grant of Representation, this also requires probate. Usually, this happens when property goes over the threshold that the institution sets.

The process of probate can be long and complicated. This is why it is important for the solicitors dealing with the case to know what they are doing. If they do not know, they can make mistakes or distribute the estate incorrectly. This was the case at the firm who had no experience handling probate cases.

How We Can Help

Here at The Inheritance Experts, we work with solicitors who have a wealth of experience dealing with Probate. Contact us today by filling in our contact form or by calling us on 01614138763 to speak to one of our friendly knowledgeable advisors.

Stepparents Exclude Stepchildren from their Will, Research Finds

According to recent reports, research shows almost half of stepparents in the UK plan to exclude their stepchildren from their Will. Tower Street Finance conducted the research to examine people’s attitudes towards inheritance.

They surveyed 2000 people, and of the 2000, 32% say that they currently have a Will which does not treat their children and stepchildren equally. And 17% excluded stepchildren from their Will completely.

This research may eventually lead to a generation of stepchildren being left out of Wills. These stepchildren may feel that they have been left out of the Wills unfairly, and it may mean that they can make an Inheritance Act claim.

stepparents exclude stepchildren from their Will

Inheritance Act Claims if Stepparents Exclude Stepchildren from their Will

The Inheritance (Provision for Family and Dependants) Act 1975 states that it is

“An act to make fresh provision for empowering the court to make orders for the making out of the estate of a deceased person of provision for the spouse, former spouse, child, child of the family or dependant of that person; and for matters connected therewith.”

Put simply, this act ensures that when a person passes away, every beneficiary receives part of their estate. A beneficiary is anyone who receives anything in a Will.

Certain people, if a Will does not include them, and they believe it should, may be able to make an Inheritance Act claim. These people include stepchildren. So if they believe that they were wrongly left out of a Will, they may be able to make a claim.

Who Can Claim Under The Inheritance Act?

Under The Inheritance Act, certain people can make a claim. these people are:

  • A spouse/civil partner
  • A former spouse/civil partner
  • Children, including stepchildren and adopted children. They can either be an adult or a minor
  • Financial dependants
  • Cohabitees. However, a cohabitee must live in the same house as the late party for a minimum of two years. Furthermore, they must be living as husband or wife of the deceased

Under these rules, stepchildren are able to make claims under The Inheritance Act.

Is there a time limit to claim under The Inheritance Act?

Yes, there is a time limit to make a claim under The Inheritance Act. This time limit is within six months of the date of the Grant of Probate. The Grant of Probate (aka Grant of Representation) is a legal document that clarifies the true Executor of a Will. In essence, it confirms that the executor has the authority to deal with the estate’s financial resources.

If that time limit passes, it may still be possible to make a claim under The Inheritance Act. However, you must contact the court so they can grant permission that the claim can be given authority.

How We Can Help if Stepparents Exclude Stepchildren from their Will

Here at The Inheritance Experts we work with solicitors who have years of experience dealing with Inheritance claims. This includes claims under The Inheritance Act. Contact us today by filling in our contact form. Or call us on 01614138763 to speak to one of our friendly knowledgeable advisors.

Long Probate Causing People to Struggle with Funeral Costs

There have been recent reports of an inheritance issue brewing across the UK, as long probate is causing people to struggle with funeral costs when a loved one passes away.

Research from Tower Street Finance has shown thirty percent of individuals in the UK have admitted they would not be able to afford to give their loved one a funeral.

Part of this problem arises from the fact many are reliant upon an inheritance from their loved one who has passed away to cover the all-important costs. One in seven of individuals asked said they would rely on an inheritance from the person who has passed away to cover funeral costs.

But with a long probate process, which happens often, it is unlikely individuals will get access to the funds they need within the time necessary.

What is Probate?

Probate is the legal and financial process that deals with the property, money, and possessions of someone when they die. When a person dies, before the executor of their Will can distribute their estate, they must apply for probate. After the court grants probate, the next of kin or executor can then deal with the deceased’s assets.

If a person dies without a Will, then the law decides who inherits everything that person owns. They follow the Rules of Intestacy to determine this. It is usually a spouse of the deceased.

Probate is usually needed in England or Wales when:

  • The person who died owned property (houses, buildings or land)
  • A bank or other financial institution asks for a grant of probate or grant of letters of administration (also called a grant of representation)

How long does Probate Take?

In England and Wales, it can take up to a year to complete probate. This depends on the assets and if there is a valid Will. In most cases HMRC conduct a thorough review of the Inheritance Tax information the executor provides.

Probate can involve many hours of detailed administrative work, including calculating Inheritance Tax, Capital Gains Tax, and other legal work.

Although the Probate process itself can be relatively straightforward with often only a few forms to be completed, the rest of the procedure that happens before this can be very time consuming.

Typically, it can take 6 to 9 months for beneficiaries to receive inheritance. However there can be delays, causing long probate. Examples of these delays include:

  • Selling shares, property, and foreign assets
  • Finding missing beneficiaries
  • Placing advertisements for potential claimants to come forward
  • Investigations by the Department for Work and Pensions
  • Claiming on a life insurance policy

How We Can Help

Here at The Inheritance Experts we work with solicitors who have years of experience dealing with all manner of inheritance claims. Contact us by filling in our contact form. Or call us on 01614138763 to speak to one of our friendly knowledgeable advisors.

Inheritance Crisis Looms as Local Authorities Work with Heir Hunters

In recent years, heir hunters have emerged to reunite people with their inheritances and manage the process accordingly. However, recent research from Anglia Research showed an inheritance crisis may be looming. This is because heir hunters are working with local authorities on anti-competitive, unaccountable contracts.

Anglia Research warned families face falling into long, costly legal battles over disputed inheritances. This is after research found local councils in England and Wales are ignoring Government guidelines and are entering into anti-competitive contracts with heir hunters.

The company surveyed local authorities in England and Wales to see how they dealt with the increase in people dying without a will and with no known next-of-kin during the coronavirus pandemic.

The research found that seven local authorities have written contracts with heir hunters. One authority in the Midlands confirmed it charges heir hunters for the details of each deceased person, or “lead”, the Council provides them with.

How the Possible Inheritance Crisis Could Impact Inheritance

Anglia Research explain: “Some contracts between an heir hunter and a local authority limit the scrutiny given to each case. Some unethical heir hunters use this to only identify easy to find heirs to an estate, collect their fee and forego the rest of the beneficiaries.

“Only 17% of local authorities said they have put in measures to prevent their employees from making under the table referrals to heir hunters. While 44 of the 348 local councils (12%) said they have policies which prevent unethical heir hunters overcharging beneficiaries.

“Only 4% of local councils which use heir hunters said they are considering how to improve their practices. Only six local authorities (1.7%) said they have implemented or are in the process of implementing a best practice approach to working with probate genealogists.”

Philip Turvey, an executive director at Anglia Research, commented on the potential inheritance crisis. “The industry has been dealing with a surge of unqualified and unethical practitioners ever since the Heir Hunters TV show sensationalised the work we do.

“As a result, we have seen a steady rise of anti-competitive contracts being signed between heir hunters and local councils, which may lead to several beneficiaries starting expensive, time-consuming court cases to obtain the inheritance they are rightfully owed.

“With the number of people dying without a will rising by 60% during the first lockdown, local councils need the support of trusted probate genealogists. This is to ensure that they distribute the deceased’s assets to the correct next-of-kin.

“The last thing they need in a time as busy and disruptive as this is an unethical heir hunter trying to enter into an exclusive contract that will ultimately only help them line their pockets at the expense of beneficiaries.”

If Someone Dies Without Making A Will

Usually when a person dies, their Estate is divided according to their Will. This means that their estate goes to who they want, how they want. If a person dies intestate, then laws known as laws of intestacy come into effect. These laws place relatives in a priority order of who inherits the estate, starting with the spouse. After the husband, wife, or civil partner, the order is:

  1. Children
  2. Grandchildren
  3. Great grandchildren
  4. Parents
  5. Siblings
  6. Nieces and nephews
  7. Other close relatives

When someone dies intestate, only a beneficiary of the estate can apply for the authority to administer the estate. This person will be known as the administrator of the estate. This is as opposed to an executor when there is a Will. The role of the administrator is very similar to the role of the executor.

If the person had no Will and you feel that they would have left you something if they had made a Will, then you may be able to make an Inheritance Act claim.

How We Can Help

Here at The Inheritance Experts, we work with solicitors who have years of experience in all manner of inheritance claims. This includes cases where there is no Will. So contact us by filling in our contact form. Or call us on to speak to one of our friendly knowledgeable advisors.

Barclays Wealth states people do not understand Inheritance Tax rules

Barclays Wealth has stated that there are people who do not understand the rules surrounding Inheritance Tax, and they have issued a warning about the levy. Barclays Wealth states nearly a third of those asked wrongly believe ISAs are exempt from Inheritance Tax.

Similarly, 40 percent believe they will be able to gift money to their immediate family without paying Inheritance Tax.

Britons have been proven to be equally confused when it comes to the gifting of property upon their eventual death. Over a quarter of those asked said they did not know if the value of their property would be considered as separate to the rest of their financial assets.

Barclays Wealth has therefore warned many individuals could be “caught out” by their lack of understanding of the rules.

This could mean loved ones face a higher tax bill as a person has not taken the steps while they were alive to reduce their IHT bill as much as is legally possible. 

Inheritance Tax Rules

Inheritance tax (IHT) is payable at 40 percent on the value of an estate above a certain threshold of a person who has passed away. To avoid taxation as much as is legally possible, many people choose to take preventative action before they pass away. However, research from Barclays Wealth has shown many people are failing to understand how IHT works.

In England and Wales, if an Estate is worth more than £325,000 when a person dies, then they typically have to pay Inheritance Tax. Currently, the Inheritance Tax rate is 40% on anything above the threshold. If a person leaves more than 10% of the estate’s value to charity, then the rate may reduce to 36%.

If inheritance tax is payable

The grant of representation will not usually be issued until the inheritance tax (IHT) has been paid to HMRC. This can potentially cause a delay in the administration of the estate.

You usually have to pay 10% of the tax due on the value of property and shares plus all of the tax due in respect of the rest of the estate. This tax payment should be made within six months of death. The additional tax is payable in yearly instalments over a ten-year period, or as soon as they are sold. Interest will start to accrue on any outstanding inheritance tax after six months from the date of death.

How we can help

Here at The Inheritance Experts we work with solicitors who have years of experience dealing with inheritance claims. This includes Inheritance Tax matters. Contact us today by filling in our contact form. Or call us on 01614138763 to speak to one of our friendly knowledgeable advisors.

Prince Philip’s £10m estate could be passed to Queen with Inheritance Tax exemption under married couples’ rule

The Queen may face an Inheritance Tax exemption on the Duke of Edinburgh’s estate if he has left his entire estate to the monarch.

Married couples can pass their estate to their spouse with an Inheritance tax exemption when they die. This means they can avoid a 40% tax above a £325,000 threshold. 

An obscure legal clause also allows inheritance to pass from “sovereign to sovereign” or the consort to a reigning monarch. This means that the Queen could pass it on to Prince Charles when she dies with another Inheritance Tax exemption. 

The Royal Family could potentially be hit with having to pay millions to the taxman if the Duke leaves a bequest to other family members. However, there would no inheritance tax bill if he left everything to one of the hundreds of charities he supported. 

Official Government tax advice says there is normally nothing to pay “if you leave everything above the threshold to your spouse, civil partner, a charity or a community amateur sports club”. 

Giving smaller amounts over 10% of the estate to charity attracts a tax rate of 36 percent on some assets. 

Inheritance Tax Rules

In England and Wales, if an Estate is worth more than £325,000 when a person dies, then they typically have to pay Inheritance Tax. Currently, the Inheritance Tax rate is 40% on anything above the threshold. If a person leaves more than 10% of the estate’s value to charity, then the rate may reduce to 36%.

If inheritance tax is payable

The grant of representation will not usually be issued until the inheritance tax (IHT) has been paid to HMRC. This can potentially cause a delay in the administration of the estate.

You will normally be expected to pay 10% of the tax due on the value of property and shares. You also have to pay all of the tax due in respect of the rest of the estate. This tax payment should be made within six months of death. The rest is payable in yearly instalments over a ten-year period, or as soon as they are sold. Interest will start to accrue on any outstanding inheritance tax after six months from the date of death.

If there are further assets in the estate, or the value has not been correctly stated, you may have to give HMRC a corrective account and pay any additional tax.

How we can help

Here at The Inheritance Experts we work with solicitors who have years of experience dealing with all manner of inheritance claims. This includes Inheritance Tax matters. Contact us today by filling in our contact form. Or call us on 01614138763 to speak to one of our friendly knowledgeable advisors.

Government Tax Day is set to Simplify Probate

The Government announced in their recent ‘Tax Day’ that around 200,000 executors and beneficiaries of estates will no longer have to complete inheritance tax forms because of changes that they have made according to a recent report. This is set to simplify probate, as it will cut the red tape and reduce the paperwork people currently have to fill out.

The Current Rules for Probate

Probate is required in England and Wales when the deceased owns property. This includes houses, buildings, and land. When a bank or financial institution requests a Grant of Representation, this also requires probate. Usually, this happens when property goes over the threshold that the institution sets.

The financial institutions where the deceased had investments or bank accounts all have their own rules about when they require the document. This is regardless of their value, so sometimes there may be other reasons an institution asks for the document.

In England and Wales, if an Estate is worth more than £325,000 when a person dies, then they typically have to pay Inheritance Tax. Currently, the Inheritance Tax rate is 40% on anything above the threshold. If a person leaves more than 10% of the estate’s value to charity, then the rate may reduce to 36%.

In England and Wales, it can take up to a year to complete probate. This depends on the assets and if there is a valid Will. In most cases HMRC conduct a thorough review of the Inheritance Tax information the executor provides.

How the New Rules Simplify Probate

The new rules will simplify the time it takes to grant probate by reducing the amount of paperwork that the executor must fill in before the court issues the grant.

The Government confirmed: “Today’s update will also cut inheritance tax red tape for more than 200,000 estates every year, dramatically reducing the amount of paperwork many families fill out.

“Over 90 percent of non-tax paying states each year will no longer have to complete inheritance tax forms when probate or confirmation is required from January 1 2022.”

Contesting Probate

Under the Inheritance Act, you only have six months from the date they issue the Grant of Probate in which to contest a will. Beneficiaries who are making a claim have twelve months. There is no statutory time limit for probate disputes around fraud.

Only someone who has an interest in the will is legally able to dispute probate. This includes individuals who are:

  • Official beneficiary.
  • Have a promise from the testator they will receive the property.
  • Somebody or some debt collector that the testator still owes money to.
  • They can also be someone financially depending on the testator but left out of the will. Examples may include their unmarried partner or child.

How we can help

Here at The Inheritance experts we work with solicitors who have years of experience dealing with all manner of inheritance claims. This includes probate. Contact us today by filling in our contact form. Or call us on 01614138763 to speak to one of our friendly knowledgeable advisors.

Trust Registration Deadline Extended

HM Revenue and Customs (HMRC) has stated that it will extend the Trust Registration Service (TRS) deadline as they have revealed that the service will not meet the original March 2021 deadline. The Trust registration deadline has been extended to some time in the Summer, according to a report by Today’s Wills and Probate.

Last July, the government set a March 2022 deadline for existing trusts to register on the TRS, or to update their records if they had already done so. The transition period had to be an extended one not just because it would take a long time for the millions of UK trusts to register, but also because HMRC had to fundamentally redesign the existing TRS to cope with the expansion.

Trust Registration and the Extended Deadline

Currently, trustees or their agents must register a trust using the Trust Registration Service (TRS) if the trust has been deliberately created by a settlor (it is an ‘express trust’) and it is currently liable to pay any of the following taxes:

  • income tax
  • capital gains tax
  • inheritance tax
  • Stamp Duty Land Tax
  • Stamp Duty Reserve Tax

Some estates also have to be registered if the personal representatives need to complete a Self Assessment Trust and Estate tax return. The Trust registration deadline has now been extended so all Trusts that need to can register in time.

Trust and Inheritance Disputes

The cause of trust and inheritance disputes can vary enormously. However, at the centre of every challenge is a person who believes they are victims of unfair treatment. For instance, trust suffers from improper management. Additionally, the trustees may interpret the intentions of the trust.

People make challenges in a number of ways. For instance, they target the value of the assets within a trust, or there might exist a fundamental disagreement between beneficiaries.

We can help if you:

  • Want to remove a trustee.
  • Disagree with the reported value of assets a trust holds and want to query it.
  • Need to make a claim against a trust for money it owes to you.
  • Want support and guidance on how to best carry out your duties as a trustee.
  • Find that the trust has ambiguous wording, and you want to clarify the structure.

We can also help you if you are considering challenging the terms or the management of a trust if you have yet to register it. We can advise you if you’re unsure whether you have legal grounds to do so. The team at The Inheritance Experts can help you understand your rights and options.

How we Can Help

Here at The Inheritance Experts, we work with solicitors who have years of experience dealing with all manner of Inheritance claims. Contact us today by filling in our contact form. Or call us on 01614138763 to speak to one of our friendly knowledgeable advisors.

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