To arrive at the amount payable when valuing a deceased person\u2019s estate, you need to include assets (property, possessions and money) they owned at their death and certain assets they gave away during the seven years before they died. The valuation must accurately reflect what those assets would reasonably receive in the open market at the date of death.<\/p>\n
Inheritance Tax is payable by different people in different circumstances. Typically, the executor or personal representative pays it using funds from the deceased\u2019s estate. The trustees are usually responsible for paying Inheritance Tax on assets in, or transferred into, a trust. Sometimes people who have received gifts, or who inherit from the deceased, have to pay Inheritance Tax – but this is not common.<\/p>\n
Valuing the deceased person\u2019s estate is one of the first things you need to do as the personal representative. You won\u2019t normally be able to take over management of their estate (called applying for probate or sometimes, applying for a grant of representation\/ confirmation) until all or some of any Inheritance Tax that is due has been paid.<\/p>\n
The valuation process<\/strong> – their share of any assets that they own jointly with someone else<\/p>\n – any assets that are held in a trust, from which they had the right to benefit<\/p>\n – any assets which they had given away, but in which they kept an interest \u2013 for instance, if they gave a house to their children but still lived in it rent-free<\/p>\n – certain assets that they gave away within the last seven years<\/p>\n Next, from the total value above, deduct everything that the deceased person owed, for example:<\/p>\n – any outstanding mortgages or other loans (If the debts exceed the value of the assets owned by the person who has died, the difference cannot be set against the value of trust property included in the estate.) When the executor pays Inheritance Tax<\/strong> The money generally comes from the deceased person\u2019s estate. However, because the tax must be paid within six months of the death and before the grant of probate can be issued (or grant of confirmation in Scotland), sometimes the executor has to borrow the money or pay it from their own funds. This can happen if it hasn\u2019t been possible to get the money from the estate in time because it\u2019s tied up in assets that have to be sold.<\/p>\n In these cases, the executor or the people who have advanced the money can be reimbursed from the estate before it\u2019s distributed among the beneficiaries.<\/p>\n When a trustee pays Inheritance Tax<\/strong> The trustees must pay any Inheritance Tax due on land or assets already held in trust. The occasions for this include:<\/p>\n – a transfer out of trust (known as the exit charge)<\/p>\n – every ten years after the original transfer into trust (known as the ten-year anniversary charge)<\/p>\n – when the beneficiary of the trust (known as the life tenant) dies – interest in possession trusts only<\/p>\n When a beneficiary or a donee has to pay Inheritance Tax – they receive a share of an estate after a death<\/p>\n – they receive a gift from someone who dies within seven years of making the gift<\/p>\n – they benefit from assets in a trust at the time of death or receive income from those assets<\/p>\n – they are the joint owner – other than a spouse or a civil partner – of a property<\/p>\n","protected":false},"excerpt":{"rendered":" Responsibility for paying Inheritance Tax To arrive at the amount payable when valuing a deceased person\u2019s estate, you need to include assets (property, possessions and money) they owned at their death and certain assets they gave away during the seven years before they died. The valuation must accurately reflect what those assets would reasonably receive… Read more »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts\/1393"}],"collection":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1393"}],"version-history":[{"count":0,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts\/1393\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1393"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1393"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1393"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nThis initially involves taking the value of all the assets owned by the deceased person, together with the value of:<\/p>\n
\n– unpaid bills
\n– funeral expenses<\/p>\n
\nThe value of all the assets, less the deductible debts, gives you the estate value. The threshold above which the value of estates is taxed at 40 per cent is currently \u00a3325,000 (frozen until April 2014).<\/p>\n
\nUsually, the executor, personal representative or administrator (for estates where there\u2019s no will) pays Inheritance Tax on any assets in the deceased\u2019s estate that are not held in trust.<\/p>\n
\nInheritance Tax on transfers into trust is only necessary if the total transfer amount is above the Inheritance Tax threshold. It\u2019s usually payable by the person making the transfer(s) – known as the settlor – not the trustees.<\/p>\n
\nIf the executor or the trustees can\u2019t pay the Inheritance Tax, the beneficiaries or donees (recipients of gifts made during a person\u2019s lifetime) may have to pay it. A beneficiary or donee only has to pay Inheritance Tax in this case if:<\/p>\n