Question Regarding Probate.

[Stargazer]

Is there a time limit whereby probate has to be submitted and completed?
Also, if the dwelling I own brings me into the Inheritance tax bracket (just) will my family have to sell my house before they pay it (or if there is enough money in the bank can they pay it out of that and retain the house? If the Inheritance tax has been taken care of is it necessary to sell the house or can it stay in the family (or is it necessary to complete probate before Inheritance tax is calculated)?
Also who values the house? Can this be challenged if it is deemed to be too high? Is it the amount they calculate it on the price it is put onto the market or is it on what someone subsequently pays for it?
I have written my own will on a proper form as it is very straightforward with no complications whatsoever and I want my two adult children to spend as much time as they like disposing of my many possessions and also do up the house before putting it on the market.
If it eventually sold for more than the Inheritance tax people had originally assessed it for, would that be a problem? Presumably the amount spent on doing it up could be deducted, but it may still sell for above what the Tax people assessed it for. Any advice appreciated.

[factor-fiction]

I'd have thought it's up to the executors to sort out the IHT payment, rather than the family, (although they may be one and the same).
If they have the cash to pay the IHT then whoever is left the house can decide what to do with it.
If you are only just in the IHT bracket there will be little IHT due. It's only payable on amounts over the threshold.

Is your spouse still around because I'm sure IHT is carried forward to the surviving spouse?

[Stargazer]

Thanks Factor. I live alone and no longer have a spouse. Both my adult children are executors andI know they will need to consult a solicitor at some point, but my questions above are really so I know how to plan ahead and talk to them about it.

[factor-fiction]

I'd expect it to be necessary to complete probate before the house is transferred to your children.
If they keep the house but don't live in it there may be CGT implications at some stage when they eventually sell it, but CGT is not my specialist area.

[factor-fiction]

You may not want to discuss this but have you separated from your spouse or has she died? If she died then I'd have thought you'd get double the IHT threshold which is around £650000

[ubasses]

Factors question about your spouse is quite important. If you are widowed then you can claim any unused percentage of your late husband's unused tax free allowance, which could easily free your estate from any IHT liability.

[Stargazer]

Thank you for giving me some information. I am divorced (a long time ago) and therefore the spouse bit does not apply.
My house may take me into Inheritance Tax (just) so maybe only a smallish amount of tax. I may have this available in savings. What I really need to know is if probate has to be completed in a certain time. Presumably the value put on the house would be that at the date of death.What I don't want to happen if avoidable is that my children have to rush about emptying and selling my house in a hurry when it could do with renovation before being sold to realise its true value. It has been neglected maintenance wise.

[ubasses]

Selling the house does not have any bearing on probate. The house will be valued as at date of death, when probate has gone through your children will then own it in equal shares. When they decide to sell it there may be some Capital gains tax to be paid on the profit. But they each have an annual allowance of of £10900 before any tax is paid.

[Stargazer]

Thanks ubasses. That is helpful. Do you kinow if probate has to be completed by a certain date?

[ubasses]

not to my knowledge, some can go on for years in complicated estates, nice to get it done as quickly as possible though.

[tonywiltshire]

You normally have 6 months from the end of the month in which the person died to obtain probate and you will probably have to pay inheritance tax due before probate is granted. I suggest you have property or land professionally valued and other items, particularly those thought to be over £500, valued as accurately as possible. If after the valuation and deduction of debts there is a liability for inheritance tax (over £325K or £650K) it will probably be at 40% if there is no charitable legacy, interest may be due payable if you are late in paying. You say you have completed a DIY will but you have many possessions I would suggest you take professional advice. There is an IHT helpline on 0845 302 0900
The comments of FF and ubasses are important.

[Peter Pedant]

any CGT is rebased to the date of your death and so is usually low unless of course they hand onto it.

If they do up the house prior to selling the expenses of doingit up are allowable against CGT (but not rental income)

[FredPuli43]

Your family, as the executors, can elect to pay inheritance tax, levied on houses and land, in instalments over 10 years. But if they sell the asset in that time ,then the whole tax remaining is payable on sale. It follows that it may be fairly easy to meet the demand, given that it appears that the value is not much above the threshold.

The executors can't normally get probate until the Revenue has been paid the inheritance tax, which in this case would be the first instalment.

[Peter Pedant]

yeah I was gonna say no housey before proby

that is you cant get your hands on the assets until the tax man has had his bit. (or should that be bite ?)