Legal/law/solictors Questionre House Sale

[hippyhoppy]

Bit of background.. Dad's house was sold for £495,000, and the solicitor costs are thus far just over £10k. The finalality (the tennants were renting and will be owners on 7th March) What should we expect to pay in inheritance/death/bastard solicor tax with what's left...? Sorry to be so vague, but am furious as the solicotor get's £6k just becuase of the value of my dad's house whilst not doing a great deal (she forgot to put the 'claim' notice in the paper so that means we have to wait another two months, and guess what dad's money is doing... earning bloody interest for them!!! Ughhhh... rant over..... (apologies if I've got the wrong end of the stick.., but I fear I may not and all my dad's whole working life of hard earned cash is going to the 'others' and not his family)

[black_cat51]

does he have any allowance from someone else?
i'm not sure that solicitor fees are taken into account when calculating iht, just the value of the estate.

[Neveracrossword]

The solicitors WON'T be earning any money - the funds have to be kept totally separate and any interest is added to the (estate's) account.

[hippyhoppy]

Nevercrossword.. I saw the statement from her and it was over £10k with 6k being just skimed off the top... Apologies if I've offended anyone.. I was told that inheritance tax could be as much as 50%... Ughh.. what a faff.. would be so much easier if mum & dad were still here..

[black_cat51]

if your mum died first and passed her allowance onto your dad, unless there are other significant amounts in the estate there will be no IHT to pay. Even if he only had his own allowance, the estate will "only" pay 40% on amounts over £325000

[black_cat51]

and if the entire estate is £495 IHT will be around 70k, although i'm surprised you havent been asked to pay something already

[decmangan]

Apply for a probate info pack. They will put you right and you have to do it anyway!

[black_cat51]

well i presume the solicitor is the executor?

[ubasses]

If your Mum died after 1975 (I think that was the year) and did not use any of her IHT allowance it will be passed to your Dad giving him a total allowance of £650000. Even if she used some of her allowance the remaining percentage can be passed to him. Are they Executors or acting for the Executors, if so the cost at around £10,000 will be about par on an estate that size. They may have to hold some of the cash back if they have not yet had clearance form the tax man re the transfer of your Mum's allowance but it should not take long to verify.

[hippyhoppy]

So, black cat.. talk to me... the house was 495,000, he had some savings (not sure but at least £50k..) so we pay nearly half of dad's money in taxes that he's spent his life paying just becuase he had the misfortune to die...

[black_cat51]

no. Its 40% on anything ABOVE the threshold. You talk to me .... did your dad get your mum's allowance? If so, there will be no IHT due on an estate of £550k

[Prudie]

Worse case you get £325K and then pay 40% of what's left. That's not half. Agree IHT is not nice for the inheritors.

[Buenchico]

>>>i'm not sure that solicitor fees are taken into account when calculating iht, just the value of the estate

Sorry, you can't deduct the solicitor's fees from the value of the estate when calculating IHT.

Quote: "You shouldn't include professional fees you pay for when dealing with the estate - things like solicitor's and estate agent's fees. You can't deduct these from the value of the estate but you may be able to claim them back from the estate later"

Source:
http://www.hmrc.gov.uk/inheritancetax/how-to-value-estate/debts.htm

IHT can be complex but the basic principles are straightforward enough. Simply add up the value of everything your father owned (such as the balance of his bank account, the value of stocks and shares and the value of the house) and then deduct any debts that he left (such as unpaid taxes, credit card bills, etc) together with the cost of his funeral. That's the value of his estate for IHT purposes. (OK, I've simplified things quite a lot and assumed that he didn't make any major gifts during the 7 years prior to his death but that's basically what you need to do).

Then deduct his tax-free allowance. That could be just £325,000 but if his wife died before him, leaving everything she owned to him, he will also get her allowance as well, so that would be £650,000 to deduct from the value of the estate. Then (assuming that your father didn't leave at least 10% of his estate to charity, when a lower tax rate would apply) HMRC will want 40% of whatever is left over.

So if your father's assets other than the house (after all his debts have been settled) didn't exceed £155,000 and he'd inherited his wife's £325,000 allowance there will be no IHT to pay.

For all the fine details of IHT, see here:
http://www.hmrc.gov.uk/inheritancetax/index.htm

[hippyhoppy]

black cat.. they had a new will drawn up a few years ago.. very functional meaning that when one of them died their half of the house would be protected.. (I hope I know what I'm talking about, I'm sure a legal person will put me straight if not) so when mum popped her paws, her half of the house (financially) was put in a 'bubble' so if dad needed to go into care, his half would pay for it and when that ran out he would be funded in a state.. as it happend, we managed to fund care for him to stay at home and when he passed away last year, mum's trust 'bubble' was released to dad's estate. We managed to rent out/sell the family home (to be completed next week) ergo the finacial turmoil... I don't think I've shed any light on a very sorry state of affairs... BTW.. the executors are my sister & brother who seem to have to chase the blood solicitor up at every turn at their/our own expense... ughhhh!!!

[black_cat51]

so what is the solicitor doing, if they are not acting as executors? When did your dad die? from what you say it seems as if it could be some time ago. If so (more than six months) they should have had to pay IHT something by now, if there is anything to pay

[hippyhoppy]

Dad died in september (93 years and 3 days!), and I was lead to believe Big Sis ad Big Bro were the executors and the bloody solictor sat on her arse and expected them to provide everything, charging them every time they deined to go anywhere near the office... she (solicitor woman) said she would put a notice in the paper in January so any potential people expecting credit could apply upto a two month period... she forgot to do so, so now we have to wait ANOTHER two months while dad's money is gaining her company interest... Ugghh.. all so frustrating when they bamboozle you with jargon...

[black_cat51]

hippy hoppy, i think you really are bamboozled because what you are saying is making no sense. If your siblings are the executors, they must have instructed the solicitor to help them because you don't need a solicitor to do it. They get a fee, not interest on the money

[FredPuli43]

If a solicitor is instructed by the executors, the solicitor charges for time and disbursements in doing the work she is asked to do by the executors, as they ask for it. What her firm charges will be told to the executors in advance, by letter, before she does anything and she will not do anything until the executors sign a copy of the letter to show that they agree; that's the professions code about fees. So the conclusion must be that your siblings, as executors, agreed to that. The interest on any money held by the solicitor is paid to the estate; the solicitor doesn't get any of it

IHT. There appears to be none or little, as explained above, depending on the total value of the estate.

[hippyhoppy]

Thanks for all your answers.. so I guess dad's estate is actually 'mum & dad's' estate so if they have a 300k+ inheritance thingy each, then our 550+ pot isn't subject to IHT... God, I sound like a right harpee...

[black_cat51]

of course you don't you silly sausage! It's difficult thing to do, not least because it's your parents that have died