When you’re probating an estate, it’s necessary to work out which probate forms should be completed from an inheritance tax perspective. It’s essential on every grant of probate application to complete an inheritance tax form, irrespective of whether inheritance tax is payable.
To assist with the proper completion of the applications for a grant of probate or confirmation and the appropriate returns to HMRC (to calculate whether inheritance tax is due on an estate), the executors must first determine if the estate qualifies as an ‘exempt’ estate, or as an ‘exempt and excepted’ estate, or if neither category applies.
This will dictate how to complete certain parts of the applications for a grant of probate and which probate form is to be used to return the relevant inheritance tax information to HMRC.
For inheritance tax, the value of the estate for the grant of probate or confirmation is only one component of the gross estate and if the deceased made substantial gifts during their lifetime, or received income from a substantial trust, or where certain other circumstances apply, this can result in an inheritance tax liability even if the estate assets don’t exceed the inheritance tax threshold.
Where the deceased was domiciled in the UK at death, the estate is an ‘excepted’ estate or an ‘exempt and excepted’ estate where either:
In addition, for both categories all of the following conditions apply:
To qualify as ‘specified transfers’, the assets given away can only be:
Any gift of land and buildings only qualifies as a specified transfer if it was an outright gift between individuals. If the gift of land and buildings was to a trust or a company, or the deceased kept back any kind of benefit from the property or was entitled to use it, it cannot qualify as a specified transfer.
If you’re not sure whether any transfers made by the deceased fall within these exceptions, you should contact the HMRC Helpline (tel: 0845 30 20 900) or seek professional advice.
Having determined if the estate qualifies as exempt or exempt and excepted, the executors are now in a position to complete the probate forms appropriately.
Get expert guidance on applying for probate, plus the probate forms you need, with Lawpack’s DIY Probate Kit.
Published on: October 26, 2011