Financial Times Guide to Inheritance Tax , Probate and Estate Planning (The FT Guides)

Nearly 9.5 million households in Britain will have to pay inheritance tax. What#x92;s the best way to avoid it? If you#x92;re administering an estate because someone has died, how do you obtain probate? Is it ever possible to retrospectively minimize an estate#x92;s tax liabilities? The Financial Times Guide to Inheritance Tax, Probate and Estate Planning will help you navigate the complicated maze of inheritance tax, probate, and estate planning. Amanda Fisher tells you what to do when someone dies, helps you deal with administrative affairs and distribute the estate to beneficiaries, offers long-term s Cover 1 The Financial Times Guide to Inheritance Tax, Probate and Estate Planning 2 Contents 6 Preface 12 Part 1 The application for probate 14 Registering a death 16 When and where to register a death 17 If the death is referred to a coroner 17 Who can register a death? 18 Documents and information you will need to register a death 19 Documents you will receive once the death has been registered 20 Removing a body from England or Wales 21 When someone dies abroad 21 Registering a death for Scottish residents 22 Registering a death for residents of Northern Ireland 23 Other matters to address when someone has died 26 Arranging to see the deceased’s solicitor or other professional adviser and the reading of any will 26 Arranging a funeral 27 Making sure that everyone who needs to know is informed 29 Checking whether all benefits are being claimed 30 Starting to collect information and documents 32 The duties of executors and administrators 34 If a will was left by the deceased 34 If no will was left by the deceased 35 Duties of the personal representatives 36 Getting professional help 37 Duties under Scottish law 38 Consideration of the validity of a will 40 The conditions for a will to be valid 41 The testator 41 Witnesses to a will 42 Revocation of a will 42 Codicils 43 Other matters 43 What to do if a will is thought to be invalid 43 What to do if a will is thought to be unfair 44 Wills under Scottish law 45 Intestacy and partial intestacy 48 The rules of intestacy in England and Wales 48 Cohabitees 50 Other dependants and the Inheritance (Provision for Family and Dependants) Act 1975 51 Assets held in joint names 51 The rules of intestacy in Northern Ireland 52 The rules of intestacy under Scottish law 53 Obtaining details of assets and liabilities 56 Beginning to deal with assets and liabilities 56 Valuing the property in the estate 57 Types of assets in the estate 57 Types of liabilities in the estate 60 Finding unknown creditors or beneficiaries 63 Information required to administer the estate 64 Starting to value the estate 65 If the valuation of the estate results in a loss 65 The need for a grant 68 Probate 68 The grant of probate 69 Applying for a grant 69 When a grant may not be needed 70 Once the grant of probate has been received 70 Different terms associated with probate 71 Scottish variations 71 Applying for probate and letters of administration 72 When a grant may not be required 72 Applying for the grant in England and Wales 73 Where to apply for the grant 73 Required forms and returns for excepted estates 75 Required forms and returns for non-excepted estates 76 The interview with the probate registry 77 The cost of applying for the grant 77 Obtaining the grant 77 Further information 78 The equivalent for Northern Ireland: applying for probate 78 The Scottish variant: applying for confirmation 80 Summary 83 Part 2 Income tax and capital gains tax 94 Treatment of income before and after the death 96 Tax liabilities of the deceased to the date of death 97 Tax liabilities at the date of death 98 Tax liabilities of the estate following death 98 Tax liabilities following the administration period 98 Tax liabilities and obligations to the date of death 102 Income tax 103 National insurance 103 Capital gains tax 103 Dates for submitting tax returns 105 Tax liabilities during the estate administration period 106 Income tax 106 Capital gains tax 107 Assets sold during the administration period before distributions 107 Assets not sold but transferred to the beneficiaries 109 Tax planning 110 Distributions of income during administration 110 Dates for submitting tax returns 112 Part 3 Inheritance tax 116 Completing the inheritance tax return 118 Inheritance tax return form IHT400 118 Completing form IHT400 119 Calculating the inheritance tax payable 137 Delivering the return form to HMRC 138 Making amendments or corrections to form IHT400 138 Scotland and Northern Ireland 139 How to value property for inheritance tax 144 Personal possessions and chattels 145 Land and property 145 Leases 146 Bank and building society accounts 147 Quoted shares and securities 147 Unit trusts 148 Unquoted shares and securities 149 Government securities 150 National Savings certificates and premium bonds 150 Individual savings accounts 150 Foreign assets 151 Trusts 151 Pensions 152 Life assurance 152 Business interests 152 Jointly-owned assets 153 Related property owned jointly with a spouse or civil partner 154 Jointly-owned assets: Scottish law 155 Overseas property 156 Chargeability to inheritance tax 156 Domicile 157 Location of assets 158 Valuation of overseas property 158 Double taxation relief 159 Considering gifts made before death 162 The occasions of charge 162 Three-step method for calculating IHT 163 Reliefs available on lifetime gifts 171 Gifts with reservation of benefit 171 Pre-owned asset transfer rules 172 Calculating inheritance tax liability on the death estate 174 The chargeability of the deceased person 175 Charges to inheritance tax on death 175 Valuation rules in an estate computation 175 The death estate computation 176 Calculation of inheritance tax on the death estate 176 Nil rate band for spouses 179 Exempt beneficiaries taking the residue of the estate 181 Business property reliefs 181 Tax credit reliefs 184 Date for payment of inheritance tax 186 Tax planning after death and deeds of variation 188 Disclaimers 188 Deeds of variation 189 Considerations for making a deed of variation 189 Excepted estates 194 Low value estates 195 Exempt excepted estates 195 Foreign domiciliaries 196 Procedure in England, Wales and Northern Ireland 197 The Scottish variant 204 Summary 210 Paying inheritance tax 212 Obtaining an inheritance tax reference number 213 Payment due date 215 Methods of payment 215 Payments from the deceased’s bank account (direct payment scheme) 216 Payments by instalment 217 Interest on overdue IHT 220 How inheritance tax is attributable to beneficiaries 220 Part 4 When probate has been granted 224 Distributing the estate 226 Dealing with the assets once the grant has been obtained 226 Protecting the personal representatives 227 Estate accounts 228 Distributing the legacies and the residue 228 Form IHT30: clearance certificate 229 Insolvent estates 229 Estate accounts 234 When estate accounts are beneficial 234 When estate accounts are necessary 235 An estate where gifts have been made to charity 235 Format for the accounts 236 Revisions and amendments to the estate 238 Relief for a loss on sale 238 Land and property 239 Notes for completing form IHT38 239 Shares 244 Notes for completing form IHT35 249 The effect on inheritance tax 250 Tax planning 251 Part 5 Lifetime planning 252 Lifetime planning to reduce an inheritance tax liability 254 Making lifetime gifts 255 Lifetime gifts: be sure you consider all taxes 261 Using the inheritance tax nil rate band 261 Making a tax-efficient will 262 Taking out insurance to cover any IHT liability 266 The benefits of making a will 268 Choosing how the estate is distributed 268 Choosing personal representatives 270 Executors can act immediately 270 Guardians can be appointed for minors 271 Tax planning advantages 271 Special wishes and the funeral 271 How to draw up a will 272 Where to keep a will 272 Living wills 273 Law in Northern Ireland and Scotland 274 Trusts 276 What is a trust? 276 The settlor 277 The beneficiaries 278 The trustees 278 The main types of trust 280 Other types of trust 284 Using trusts for tax and practical reasons 287 Seeking professional advice 292 Trusts and Scottish law 292 Appendix A Tax return SA900 relating to the estate administration period and form R185 294 Form R185: income payments to beneficiaries 294 Appendix B Inheritance tax return forms 309 Form IHT 400: inheritance tax return 309 Form IHT 400: calculation 311 Form IHT 402: claim to transfer unused nil rate band 311 Appendix C Estate accounts 324 Appendix D Further help 332 Glossary 336 Index 340 Nearly 9.5 million households in Britain will have to pay inheritance tax. What’s the best way to avoid it? If you’re administering an estate because someone has died, how do you obtain probate? Is it ever possible to retrospectively minimize an estate’s tax liabilities? The Financial Times Guide to Inheritance Tax, Probate and Estate Planning will help you navigate the complicated maze of inheritance tax, probate, and estate planning. Amanda Fisher tells you what to do when someone dies, helps you deal with administrative affairs and distribute the estate to beneficiaries, offers long-term strategies on how to protect your estate and minimize any potential inheritance tax liability, including the use of trusts. The Financial Times Guide to Inheritance Tax, Probate and Estate Planning: · Explains what to do when someone has died including how to register the death · Advises on the duties of executors and administrators and how to consider the validity of a will · Helps you apply for the grant of probate or letters of administration · Guides you through the completion of inheritance tax returns and how to calculate and pay any tax due · Provides advice on lifetime planning and illustrates ways to minimize potential inheritance tax liabilities The Financial Times Guide to Inheritance Tax, Probate and Estate Planning will help you face the difficult task of dealing with an estate when someone has died. You’ll learn the best way to manage the process of acquiring probate and complete the administration of the estate, before distributing to the beneficiaries. You will also have an insight to the advantages of make a will and organizing your estate efficiently to minimize any future impact of inheritance tax, including the use of trusts. The Financial Times Guide to Inheritance Tax, Probate and Estate Planning covers: Registering a death The duties of the executors and administrators Consideration of the validity of a will Intestacy and partial intestacy Obtaining details of assets and liabilities Applying for the grant of probate and the letters of administration How income and gains are treated before and after the date of death Valuing property for inheritance tax Calculating the inheritance tax liability and completing the inheritance tax return forms Consideration of tax planning and deeds of variation Paying the inheritance tax Distributing the estate to the beneficiaries Lifetime planning to reduce an inheritance tax liability The benefits of making a Will Trusts Glossary of key terms Nearly 9.5 million households in Britain will have to pay inheritance tax. What’s the best way to avoid it? If you’re administering an estate because someone has died, how do you obtain probate? Is it ever possible to retrospectively minimize an estate’s tax liabilities? __The Financial Times Guide to Inheritance Tax, Probate and Estate Planning:__ · Advises on the duties of executors and administrators and how to consider the validity of a will · Guides you through the completion of inheritance tax returns and how to calculate and pay any tax due __The Financial Times Guide to Inheritance Tax, Probate and Estate Planning__ will help you face the difficult task of dealing with an estate when someone has died. You’ll learn the best way to manage the process of acquiring probate and complete the administration of the estate, before distributing to the beneficiaries. You will also have an insight to the advantages of make a will and organizing your estate efficiently to minimize any future impact of inheritance tax, including the use of trusts. Registering a death Consideration of the validity of a will Obtaining details of assets and liabilities How income and gains are treated before and after the date of death Calculating the inheritance tax liability and completing the inheritance tax return forms Paying the inheritance tax Lifetime planning to reduce an inheritance tax liability Trusts