When a death occurs it is a very difficult and emotional time for family and friends. It can lead to considerable distress. The sense of loss and feelings of helplessness can almost overtake those left behind. All of us have to face family bereavements and the emotional turmoil that comes with them.
During this difficult time the financial affairs of the deceased have to be wound up and the assets calculated. If the assets are above a certain threshold applications have to be made to the Capital Taxes Office in respect of Inheritance Tax and then to the High Court to appoint the executors of the or near relative as the estate administrator.
We can provide immediate help and guidance through this difficult process and ensure that the executor or administrator complies with their legal responsibilities. We can provide help with the Capital Tax Office, Inheritance Tax and High Court applications. We can guide and assist on will & intestacy estate administration, asset realisation, debt settlement, deeds of variation, income tax repayment claims, trust management and the other issues that may arise.
We appreciate how difficult a time this is and we will work sensitively and at the pace we are asked to.
Estate Administration is the process that enables the estate of a deceased person to be wound up. It can involve the completion of Inheritance Tax returns, making the necessary court applications, finalising taxation issues, making any trust arrangements, releasing or transferring the assets, paying any debts and ultimately distributing the estate.
The administration of an estate varies depending on it's value and also whether the deceased person has written a will or not.
Assets under £5000
If the estate is valued at less than £5000 in total, the funds can usually be realised without the need for extracting a Grant of Probate (where there is a Will) or Letters of Administration (where there is no Will). In this instance, the bank / building society would require a Form of Indemnity to be signed by the Personal Representatives in the presence of a solicitor
Assets over £5000
Where the total value of the estate is in excess of £5000, a Court Order will be necessary in order to access and deal with the assets. The application to the Court cannot be made until Inheritance Tax returns have been completed and submitted to the Inland Revenue. If any Inheritance Tax is due (in estates with a taxable value in excess of the current Inheritance Tax threshold), this will need to be settled within 6 months from the date of death and prior to the application to the Court for the Grant of Probate / Letters of Administration. However it may be possible to pay Inheritance Tax by instalments in certain situations.
How will we administer your estate?
We will complete Inheritance Tax returns, make any necessary Court applications whether or not there is a Will, finalise the tax situations and apply for tax refunds, make any trust arrangements, release or transfer the assets, pay any debts and distribute the estate in accordance with the law. If there are any opportunities for post death tax planning we will advise on varying the will or distribution of the estate to best tax advantage. We will make sure you discharge all your legal responsibilities and are not left exposed on issues to the tax authorities, creditors & others wishing to claim against the estate.
Tax issues after death:
Executors or administrators in estates have obligations and personal liability to complete inheritance tax returns to the Capital Taxes Office, pay Inheritance Tax and make any disclosures regarding additional assets. The Income Tax positions of both the deceased and the executors / administrators have to be settled and any tax returns required submitted to Her Majesty's Revenue and Customs.
What CMG Cunningham Dickey Solicitors will do:
We will complete the Inheritance Tax returns documentation and submit it to the Capital Taxes Office, will advise on any tax liabilities arising. We will complete Income tax returns for the deceased and during the administration period, apply for any tax repayments that are due. Also we will ensure that the tax affairs of both the deceased and the executors / administrators are considered closed by the appropriate authorities.
What is Inheritance Tax?
Inheritance Tax (IHT) is a tax that may be payable on an individual's estate upon death. The payment of IHT is dependent on a number of factors including the size of the estate and the types of transfers made. IHT may also be payable on gifts made during a persons lifetime. It is payable on any 'chargeable transfers' made either during your lifetime or upon death.
For IHT purposes, when a person dies, they are deemed to have made a transfer of all of their property on the date of their death. However, some people may also be liable for IHT for gifts made during their lifetime.
What is a Chargeable Transfer?
All Transfers of Value are chargeable to IHT. Any gift made that reduces the value of your estate is considered to be a Transfer of Value. All transfers of value are considered to be 'chargeable transfers' unless legislation specifically exempts them. The value of the transfer is the reduction in the value of the estate and this is normally the value of the estate being transferred. The transfer of value can be made during lifetime or death.
Who pays Inheritance Tax?
IHT is payable by people domiciled in the United Kingdom. If the UK is your permanent home, all of your assets, with some exceptions, will be subject to IHT. If your are not domiciled in the UK, any assets held within the UK will be subject to IHT.
What is the rate of Inheritance Tax?
The rate of tax on death is 40% and the rate of tax chargeable on any lifetime chargeable transfers is 20%. However, IHT will only becomes payable once the chargeable transfers exceed the Nil Rate Band on the date of death. This rate can vary each year. The current Nil Rate Band is £325,000 per person.
The government has recently introduced new rules relating to the Nil Rate Band. It is now possible for spouses and civil partners to transfer any part of the unused Nil Rate Band when the first spouse/civil partner dies to the surviving spouse/civil partner's Nil Rate Band.
Therefore upon the death of the surviving spouse/partner, their Nil Rate Band will be increased by the proportion of the unused Nil Rate band of their partner.
18 May Street
t: 028 9023 4606
f: 028 9032 6578
3 Market Street
t: 028 9145 7911
f: 028 9145 0679
Brian H Speers
Julie Ann Osborne