IHT for uk assets for Non Uk residents


Postby patelmc@yahoo.com on Wed Nov 05, 2003 3:31 pm

Hi

My parents who never lived in the uk passed away and we found out they had a fixed deposit account just in their names in a Uk bank.
I was told by the bank to get the probate resealed in the Uk.
All the beneficiaries are non UK citizen & reside in the USA.

I think my dad had signed one of those IRS forms to earn interest tax free as he was not a uk resident.

Do we have to pay any UK IHT or capital gains tax?

Are there any schemes for the beneficiaries to keep this money in the uk and not to pay uk tax ?

How difficult is it in getting the probate resealed, time wise and what other cost are involved with this process apart from lawyers fees.

Thanks
Mp
patelmc@yahoo.com
 
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Postby Nigel Lord on Thu Nov 06, 2003 2:18 am

Mp

There are two issues.

Firstly, you should be relieved to hear that your parents would not be liable to UK IHT on any assets other than those sited in the UK. Furthermore, they would each have a nil rate band for UK IHT purposes totalling £255,000 in the year ending 5 April 2004 (£250,000 in the year ending 5 April 2003).

Secondly, obtaining probate in the UK in respect of a single asset such as cash in a deposit account is relatively simple. I refer you to the Probate Office see link:

http://www.courtservice.gov.uk/cms/3801.htm

You almost certainly do not require a lawyer, although you may need to swear papers before a Commissioner of Oaths.

Nigel Lord
Lord Associates
Taxation & Business Consultants
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Old Station Road
Loughton
Essex, IG10 4PE
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Postby Taxbar on Thu Nov 06, 2003 6:43 am

Dear Patelmc,

I wish your problem was simple.

There are a number of steps here.

Firstly, when and where did your parents die and was that their home country. Did they leave wills there and who died first.

Assuming they didn't die together, then the bank account will (unless the law of their home country is different) have passed from the first to die to the second to die estate.

You therefore need a death certificate or other document for the first to die and the foreign will of the second.
This needs to be re-sealed in the UK and this is not a matter I have ever seen a private individual handle. You need to get it possibly transalated if it is not in English and the translation notarised. This has then to be submitted to the probate court with an oath setting out the wills terms etc.

Before the will can be re-sealed in the UK a Form has to be filed regarding UK IHT and this depends on the sum in the account etc.They may want to know about the deceased, their residence and the size of their estate outside the UK etc.

I would estimate it would all take 3-4 months and you need a firm of solicitors experienced in this area. The longer you leave it the harder it is to get information such as the foreign probate

Daniel M Feingold
Barrister-at-law (NP)
Strategic Tax Planning
International & UK Tax Consultants
 
Treen House 72 Park Road,
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Taxbar
 
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Postby patelmc@yahoo.com on Thu Nov 06, 2003 3:43 pm

Thank you Nigel Lord & Daniel M Feingold for providing some guidance on this issue.

I would like to add some data that I forgot to mentioned.
Both died at the sametime in the home country & both had wills. All documents were writtern in english, including the probate issued by the home country (previously a british colony).

1) Why IH tax ? when both my parents & the beneficiaries are not UK resident and not UK domicile, it does not make any sense.
I would have assumed this should be classified as a foreign investment made in the UK and should be exempted atleast from IHT, instead it seems, the investor is being penalised for not taking the asset out of the UK before dying by charging a 40% tax.

I cannot believe that UK IH Tax laws are this badly writtern.

2) Does the UK asset get split equally since it was a joint account and does each estate get to use the 250k limit towards the 50% share of the asset received.

3) Is resealing the probate same as doing a whole new one ? The probate I have has all the documents it needed attached to it and thought that would have been enough to reseal it.

4) What qualifications should I be looking for in order to select the right solicitor for this job?

Thanks
MP
patelmc@yahoo.com
 
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Joined: Wed Aug 06, 2008 3:06 pm


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