IHT/Unused Allowance Question

[plc]

Hello,

My Mother died approximately 10 years ago. On her death, everything passed automatically to my Father.

I am aware that the previous government implemented a change in the law whereby the unused proportion of my Mother's will can be added to my Father's IHT threshold on his death, thus giving my Father an IHT threshold of £650,000 (at current 2011/12 limits) rather than £325,000.

The problem is this - my Father says that he's unable to locate a copy of my Mother's will. I've asked him to contact the local solicitor to see whether they still have a copy, but will HMRC be happy with a simple explanation that everything passed automatically from my Mother to my Father? or would they ask for written proof (i.e. a copy of the will)?

My Father's still alive and well, but his total estate is likely to be somewhere between £325,000 and £650,000 and I'm thinking ahead to the future and don't particularly want to pay thousands to the tax man for the lack of a piece of paper.

This question must have come up many times previously since the change in the law - how am I able to prove to HMRC that my Mother's IHT allowance was unused if my Father is unable to locate a copy of my Mother's will?

Many Thanks.

[AvocadoK]

Hello,
You can obtain a copy from the Probate Registry, for £6.
Have a look at http://www.justice.gov.uk/guidance/courts-and-tribunals/courts/probate/copies-of-grants-wills.htm
AK

[plc]

Many Thanks Avocado, that's very useful.

[IanDarkwater]

Only true if Mum's will went thro probate. Quite often probate isn't needed when the first spouse dies. I understand that HMRC think it will be up to Dad's executors to provide evidence to satisfy them that his estate is entitled to claim Mum's allowance. This can be tricky!!

[plc]

Thanks for the advice,

I asked my Dad to speak with his Solicitor this morning to determine whether a copy of my Mum's will exists, the solicitor recommended keeping a copy of this will together with my Dad's Will and my Mum's Birth & Death Certificates.

She also asked whether his property was owned by 'Joint Tenants' or 'Tenants In Common', although I'm unsure as to what difference this makes to the final outcome. If I assume that their property was owned as Joint Tenants, does anybody know what happens to my Mum's IHT allowance?

Many Thanks.

[IanDarkwater]

'Joint Tenants' or 'Joint Tenants In Common' doesn't matter. What was Mum & Dad's house is now Dad's house either by survivourship or by Mum's absent will.

I've just noticed that OP wrote '...On her death, everything passed automatically to my Father.' Does this imply that Mum didn't have a will but owned everything joint - joint tenants - with Dad? In which case the demonstration of that to HMRC on Dad's death is what his executors will need to achieve.

[plc]

Hi Ian,

My Mum did have a will (my parents both had mirror wills at the time, her's left everything to my Father and vice-versa), but because she died ten years ago my Dad thinks he threw it out several years back during one of his "cleaning up" sessions, that's why I've asked him to contact the Solicitor to see if she still has a copy.

The Solicitor has told my Father that a check on the ownership of the property can be done for £4, so that may well be the next step if my Mum's will cannot be traced.

[plc]

Good News - the solicitor contacted my Dad today to say that they've now located my Mum's will - so at least that bit's sorted.

However, the solicitor then raised a question around the property - apparently her detective work has determined that the Land Registry has no record of it!! When she asked if my Dad had purchased the property fairly recently, he replied "27 years ago", which confused the hell out of the solicitor. My Dad's next mission is to contact the bank (where his deeds are currently stored) and request the deeds. Once he has the deeds, the solicitor then needs to go about ensuring that the property is properly registered with Land Registry...

[John-the-pilot]

A question Just for the benefit of the original poster:
Assuming we are all talking about the Land Registry for England:
When did it become compulsory to (first) register an assent?
(That is the document that transfers ownership to a beneficiary, as against compulsory (first) registration of a purchase, which from memory, became universally registrable everywhere back in the 1970's. Is father's memory getting a bit hazy, because I make that more than 27 years ago?)

Perhaps dad was just trying to save a few quid in fees in those pre computerisation days, when mum died?.

I remember, when my father died (years and years ago), pointing out to the solicitor that the property had not been re-registered into the names of the 3 beneficiaries, his attitude was how much bigger did I want to make the overdraft of an estate with a cash deficit.

As I was the administrator together nominally with my mother, of my father's near bankrupt estate [only net assets half a partnership with another overdrawn partner, posh house and a not too wonderful Ford car plus some reasonable furniture. The house had been paid for by a mortgage protection policy] when my mother passed on, my sister and I, as executors of her will, found it fairly simple to fill in a Land Registry form and get the property "assented" into our joint names.

Obviously you need to know the exact legal position of the house and it probably makes sense to tidy up now, while dad is still on hand and compos mentis; so able to sign (and swear?) any documents needed to bring things up to date.

What dad's executor (you?) and HMRC will need to see is given here:
http://www.hmrc.gov.uk/inheritancetax/intro/transfer-threshold.htm#3

[Warning this is just one persons practical experience - there is no substitute for for good up to date professional advice.

John.

[John-the-pilot]

Joint tenancy makes it simple - Mother could not have left "her half" of the property to anyone else.

Legally there are two ownerships of the land. The "freeholder(s)", up to 4 of them, and the equitable owners of the proceeds of any sale, this could in theory be any number.
A tenancy in common allows the proceeds of any sale to be left to shared out amongst other people who are not necessarily the other freeholders.
It is a good system, it avoids the problem one can see physically in somewhere like France, where a dozen cousins own the old farmhouse and squabble amongst themselves, while the roof falls in. It also reduces the problem of having a document that needs to be signed by the owners and not being able to find one of them.