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Where Taxpayers and Advisers Meet

IHT and shares

Qryio
Posts:8
Joined:Fri Sep 07, 2018 8:00 pm
IHT and shares

Postby Qryio » Fri Sep 07, 2018 8:17 pm

My mother has been left 50% shares in a will 'absolutely and free of tax'
by a man who was part owner of small limited company (commercial property letting).
A valuation of the estate and company is in progress.

The wife of the man will be left the house and residue of the estate.
Can anyone confirm does any IHT due come from that residue?
What happens if not enough residue to pay any IHT due?

Will my mother be liable for any tax at all on the shares now if she gets them or in the future?
If my mother or the wife dies before the man's estate is sorted who do the shares go to ?

Thanks in advance

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: IHT and shares

Postby maths » Sun Sep 09, 2018 6:26 pm

Any IHT on your mother's inheritance will be payable out of the deceased's estate's residue.

If there is insufficient residue to discharge any relevant IHT (or other appropriate expenses, debts etc) then the law lays down a statutory order in which assets of the deceased's estate are applied in discharging IHT etc.

As mother's inheritance is of a specific gift it would be probably unlikely her inheritance would have to bear any shortfall (but this would depend on the extent of any shortfall).

If mother dies before receiving the shares from the administration of the deceased's estate then the shares would form part of her death estate and would be inherited according to the terms of her will (or on intestacy if she had no will).

On any future lifetime gift or sale of the shares mother may have a CGT liability.

Qryio
Posts:8
Joined:Fri Sep 07, 2018 8:00 pm

Re: IHT and shares

Postby Qryio » Sun Sep 09, 2018 6:48 pm

Thanks so much: that's very clear and very helpful :)

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: IHT and shares

Postby AGoodman » Mon Sep 10, 2018 10:18 am

If it is a letting agency (aka an estate agent) rather than an owner of commercial property, it may well benefit from 100% business property relief and no IHT will be payable on the legacy.

Qryio
Posts:8
Joined:Fri Sep 07, 2018 8:00 pm

Re: IHT and shares

Postby Qryio » Tue Sep 11, 2018 11:19 am

Hi

The company rents out commercial property it owns and is classed as:

'68209 - Other letting and operating of own or leased real estate'

at Companies House

though it has had to sell some of the property recently so there is now cash in the company accounts...?

Qryio
Posts:8
Joined:Fri Sep 07, 2018 8:00 pm

Re: IHT and shares

Postby Qryio » Tue Sep 11, 2018 12:46 pm

Also if anyone can shed light on the following?:

At what point and by whom is IHT paid? I understand if executors have been involved in an estate, they have to pay the tax due first and then reclaim that tax from the estate later.

What happens if executors can't or won't pay the tax and/or 'resign'? Who appoints a new executor?

If it's e.g. a probate solicitor who is appointed are they then responsible for the IHT and do they again pay it and claim it back or is it the responsibility of someone else in the man's family to pay e.g. the wife and claim it back? And is there a time limit on paying the IHT?

Does my mother have to be kept informed if executors change etc. and what's happening with the estate?

Thanks very much in advance

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: IHT and shares

Postby pawncob » Tue Sep 11, 2018 5:01 pm

The executors are responsible for paying the IHT due, and are indemnified by the estate.
An exec can only renounce his office before he has acted, so refusal to pay the IHT won't arise.
Anyone who benefits under the will can apply as administrator.
When IHT falls due depends on the assets concerned. Normally 6 months after death.
With a pinch of salt take what I say, but don't exceed your RDA

Qryio
Posts:8
Joined:Fri Sep 07, 2018 8:00 pm

Re: IHT and shares

Postby Qryio » Tue Sep 11, 2018 7:29 pm

Thanks for your response. I've a feeling the executors haven't yet done anything which might be classed as 'intermeddling' (theyve been involved in funeral arrangements and have started valuing assetts but beyond that...) so am thinking they may renounce or resign or whatever the word is precisely because they may have already worked out roughly the IHT sum they may have to pay upfront - and don't want to

My concern is that it will probably fall to either someone else in the man's family to execute the will, i.e. his daughter, on his wife's behalf, or they may appoint a probate solicitor. In that case I just wonder what the process is of how my mother is kept in the loop about this will and about what is happening about the shares due to her?

Thanks again.

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: IHT and shares

Postby pawncob » Wed Sep 12, 2018 11:50 am

The exec has a year in which to call in the assets and pay creditors. Only after that time does he have to report to the beneficiaries.

The execs don't pay the IHT personally, they borrow the money secured on the assets.
With a pinch of salt take what I say, but don't exceed your RDA

Qryio
Posts:8
Joined:Fri Sep 07, 2018 8:00 pm

Re: IHT and shares

Postby Qryio » Wed Sep 12, 2018 1:58 pm

Hi thanks for that...

So am I understanding correctly here: any executors do not personally pay up front at any point for any IHT, they can take it directly from the estate?

Thing is: I thought IHT had to be paid before probate granted and they could take money from estate like that?

Sorry, very confused about the IHT process! :-(


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