I keep reminding people about the importance of ensuring that you take legal advice when a loved one passes away, especially if you are the Executor of the estate.
Not only must you make sure that you are undertaking the role and the responsibilities of being an Executor correctly, and ensuring that the estate is distributed correctly, but also ensuring that the correct inheritance tax (IHT) is paid.
There has been a recent report stating that HMRC is “targeting bereaved families with a raid on inheritance tax after it clawed back a record £326m through investigations last year”.
Unfortunately, there are many that think that they can easily reduce IHT or not have to pay IHT altogether, but it is not as simple as this, especially when HMRC start investigating.
For example, whilst we may be going through a cost of living crisis, property prices are still at an all time high in many areas, which is only increasing the value of estates and therefore increasing the likelihood of IHT being payable.
Decreasing the value of the property (and other assets, such as personal chattels) will only mean that HMRC may look further into this. The assets need to be valued correctly.
I have also heard horror stories of those giving large gifts to family and friends in an attempt to reduce the risk of IHT but this can only cause more problems. Giving away large cash gifts does not always stop IHT from being payable.
If HMRC investigates and finds that the correct amount of IHT was not paid, then no doubt you will also be subject to other fees and interest on top of the amount already due.
I would always suggest taking legal advice prior to ensure that you are dealing with the estate in the correct way. Do not get caught out.
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The information provided in this article is not intended to constitute professional advice and you should take full and comprehensive legal, accountancy or financial advice as appropriate on your individual circumstances by a fully qualified Solicitor, Accountant or Financial Advisor/Mortgage Broker before you embark on any course of action.