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Clare
Clare, Solicitor
Category: Law
Satisfied Customers: 34276
Experience:  I have been a solicitor in High Street Practice since 1985 with a wide general experience.
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My Uncle left £305,000 from the sale of his flat and also £100,000

Resolved Question:

My Uncle left £305,000 from the sale of his flat and also £100,000 in investments. This was to be divided equally between 3 charities and 4 family members. The Executors of his will, a firm of London solicitors, have said that we have to pay £50,000 Inheritance Tax even though he took financial advice and planned his will so that nothing would be due to be paid of the Inland Revenue. We have all received £55,000 each but approx. £50,000 has been paid to the Inland Revenue. Having taken advice from 3 people who have queried what the solicitors have done and advised us that nothing should have been paid to IHT. My uncle died in 2013 and it appears to me that the solicitors have not only been very slow to settle matters but have also be negligent in carrying out his wishes.
Sue Phillips
Submitted: 1 year ago.
Category: Law
Expert:  Clare replied 1 year ago.
HiThank you for your questionMy name is ***** ***** do my best to help you but I need some further information firstWhat makes you think that no Inheritance Tax would have been payable?
Expert:  Clare replied 1 year ago.
I have been told by an IHT expert that the threshold is £320,000 plus any money paid to the charities ie. 3/7ths of the £404,000 before Inheritance Tax applies
You did not need to open a new thread!
In fact what the payment to charity allows for is a reduced rate of 36%
Details here
https://www.gov.uk/inheritance-tax-reduced-rate-calculator
However the figures simply do not add up - did you get a copy of the Estate Accounts?
Customer: replied 1 year ago.
Hello ClareI have a copy of the 'First Interim Estate and Distribution Accounts' but haven't received a final one yet.Sue Phillips
Expert:  Clare replied 1 year ago.
What do the figures say so far?
Customer: replied 1 year ago.
Assets/Income = £467,908.66
Liabilities of the Estate/Ad. Expenses = £78,626.39 this include £57,401.25 Inheritance Tax and their fees of £17,100
Balance to Distribution Account = £389,282.27Distribution Account
First plus Second distribution to each of the 3 charities = £54,180.53 minus £3,339.51 charity exemption.
First plus Second distribution to each of the 5 beneficiaries = £54,180.54I have been advised by my own solicitor and two other people with Inheritance knowledge that the IHT400 should reflect the £320,000 plus any money paid to the charities (£150,000 approx.) is calculated before IHT is applied. If the money exceeds £470,000 then it at this point IHT will apply.The solicitors who were the Trustees haven't worked on this formula. I hope this is clear.Sue Phillips
Expert:  Clare replied 1 year ago.
HiIn fact that is not quite how it works.Provided more than 10% of the Estate goes to Charity it is possible to qualify for a lower rate of Inheritance Tax - 36% rather than 40%.Then when the residue is divided the gifts to the Charities are exempt - so in fact the estate pays 5/8ths of the bill rather than the full amount.Details herehttps://www.gov.uk/inheritance-tax/giving-to-charity-to-reduce-an-inheritance-tax-billGiven that the assets are higher than I thought the figures now workI hope that this is of assistance - please ask if you need further detailsClare
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