If you are acting as an executor or personal representative, you will need to check whether or not inheritance tax must be paid on the estate. This can be a particularly complicated element of the probate process, as it involves valuing the estate and, if it exceeds the threshold, paying the necessary amount within a certain timeframe.

To help clarify the position on inheritance tax, we take a closer look at when inheritance might be due, how you can pay it and where you can find further advice, should you need it.

Who must pay inheritance tax?

Inheritance tax is paid upon somebody’s estate when they die. An ‘estate’ is the collective term for a person’s assets and belongings, including property, bank accounts, furniture and other possessions. However, inheritance tax must only be paid if the value of an estate exceeds the current threshold, which for 2012-2013 is as follows:-

  • If you are single: £325,000
  • If you are married or in a civil partnership: £650,000

Anything that exceeds the threshold will be subject to inheritance tax, which is payable at 40%.

In order to find out whether or not inheritance tax is indeed due, it will be necessary to calculate the value of an estate. Typically this will be carried out by the executor or personal representative of the deceased’s will. First, you must add up the worth of each asset, including property, investments, money, assets held in trust and any jointly-owned assets. Next you must deduct the cost of any outstanding bills and payments, including funeral expenses. The sum you are left with will be the value of the estate.

Paying inheritance tax

As part of the probate process, the executor or personal representative must fill out a form declaring whether or not inheritance tax is due. If so, a separate form must be filled in and sent to the Probate Registry; at the same time you must pay some or all of the inheritance tax. Otherwise a grant of probate will not be issued.

As long as there are no problems, it will usually take around eight weeks for a grant of probate to be issue. You will then have control over all the deceased’s assets. This will enable you to use their bank account or proceeds from house sales to pay off the remaining inheritance tax. Ordinarily, this must be done within six months of the deceased’s death.

Need further advice?

Inheritance tax is something that often causes problems during the probate process, as there are many technicalities that leave many uncertain as to whether or not it must be paid. This is particularly true when trusts and gifts are involved.

If you would like any further advice about probate and inheritance tax, simply contact us at Roskell Davies solicitors and allow our professional legal advisors to help. Call us on 0800 142 2901 or complete an online enquiry.

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