Probate problems – beneficiaries must pay Inheritance Tax bill from own funds
IHT can cause significant stress and expense for beneficiaries or Trustees, who are responsible for the payment of this tax bill at the beginning of probate.
Probate cannot be granted until the Inheritance Tax bill has been paid, although unfortunately, the deceased person’s assets are frozen until probate has been granted. Which means in effect that the beneficiaries or Trustees must pay potentially thousands of pounds in Inheritance Tax before they can touch a penny of the Estate.
With the IHT tax threshold now standing at £325,000, millions of people face an anxious battle to find the necessary funds before probate can progress. Above this figure, the tax is levied at 40 percent of the total value of the Estate, payable six months after the end of the month in which the individual died although the proportion of tax that is due from the value of the property only (not cash assets) can be paid in ten yearly instalments. Any unpaid tax will of course accrue interest.
If you’re thinking of having your Will prepared, bear these facts in mind and consult with a professional Estate planner, who can help you minimise the amount of Inheritance Tax which will fall due in the event of your death.