Shame can cost serious money
Jane Cassell
Fixed fee Probate, Wills, LPAs & Contentious Probate to give you peace of mind. Free chat to understand what’s required. Jane’s team cares ????
When someone dies, people's responses are unique to them.
I've known some people attend my office the very next day, and I've observed the shame of people who have left things for literally years.
And years.
In recent weeks, I've had a number of families contact me, who have left matters and it clearly feels overwhelming now, to deal with things.
Perhaps one parent died, and there was a lot to cope with, some family members were ill, and then the other parent died. And one of the adult children is still living in the property. and as well as the legal requirements of sorting things out, it's put off because some really uncomfortable conversations will need to happen, to resolve the fact that in order for all children to benefit, one adult child will need to move out.
If you're dealing with this sort of situation, please know that you're not alone.
The bad news is that if things have been left beyond two years after the second parent died, then I'm sorry to confirm that some transferrable tax allowances have likely been lost. The truth is that could cost an extra ￡200k tax.
The good news however, is that a specialist professional can help sort it all out.
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For those of you thinking can it really be possible to pay an extra ￡200k Inheritance Tax, this is how. When the second parent dies, they have their own tax allowances, which are the Nil Rate Band of ￡325k and possibly the Residence Nil Rate Band of ￡175k which add up to ￡500k.
So where's the loss?
When the second parent dies, assuming that the first parent to die, left the whole of their own estate to the spouse, the estate of the second parent, can claim the allowances of the first parent's estate.
If those allowances are not claimed (please remember they are not automatic, they have to be claimed), within two years of the second parent's death then they are lost. And as Inheritance Tax is charged at 40%, you can see that losing out on ￡500k of allowances at 40% equals ￡200k tax.
The tax at that level, is massive, and disturbing to many people.
What I have observed though, almost as destructive as the horrible tax situation, is the dreadful shame of not dealing with something you know you need to deal with. And often there is one adult child who has been allowed to live in the property over many years. That is not good for family relationships.
Clearly the above examples are just examples, and it's essential to take advice in relation to your own circumstances, but the general principles are to take specialist advice within a sensible period of time.
If you think it's time to chat things through, please call Jane on 01727 840 240 or drop her a line to introduce yourself, at [email protected] and we can work out what needs to be done, when, and how much it'll cost. There's no charge to chat.