Inheritance Tax
If the estates assets are worth more that the prevailing Nil Rate Band at the time of death, the estate will be chargeable to Inheritance Tax at 40%, subject to any available exemptions and reliefs for which the estate may qualify. The current Nil Rate Band is presently frozen at £325,000.00
It is also now possible to transfer an unused Nil Rate Band so that it can be utilised, by the executors of the second spouse or civil partner to die.
Inheritance Tax has to be paid before the Probate application is made, and in these situations, lengthy IHT returns have to be completed by or on behalf of the Executors, and submitted to the Revenue with payment after. Six months from death, interest becomes payable.
It is important that the Executor is able to back up the value of each asset in the tax return. If insufficient tax has been distributed to beneficiaries, who have spent the money, the executors may have no alternative but to pay it out of their own resources.
If an executor has negligently paid too much IHT or not claimed all the reliefs and exemptions available, again the executor may incur personal liability.