More to administering an estate than obtaining the Grant of Probate

Brenda Smyth of AMD Solicitors considers the tax implications when dealing with the administration of an estate.

When applying for a Grant of Probate, the Personal Representatives of an estate must complete and submit an Inheritance Tax form giving details of all assets and liabilities of an estate. This may need to include details of lifetime gifts made by the deceased or any interests in trusts which the deceased may have had. Personal Representatives have a duty to make full enquiries to obtain the necessary information to complete the form correctly and failure to do so may result in interest having to be paid on tax paid late or even in tax penalties.

Delays at HMRC and Probate Registry

Delays with both the tax office and the Probate Registry mean it is even more important to get things right the first time to avoid unnecessary interest or penalties relating to lack of disclosure.

Even when the Personal Representatives correctly ascertain and disclose assets and liabilities in the estate, mistakes can still be made, such as not claiming all allowances and reliefs available to reduce the value of the estate for Inheritance Tax purposes.

Other considerations

Consideration of the Inheritance Tax liability does not end once the Grant of Probate has been issued. If further assets or liabilities come to light or there is any other change in the value of the estate for Inheritance Tax purposes, these may need to be disclosed to HM Revenue and Customs. There may also be additional reliefs to consider.

Inheritance Tax is not the only tax to consider when administering an estate. If an asset is sold during the course of the administration of an estate, there may be a Capital Gains Tax liability on the Personal Representatives. It may be that, with careful planning and depending on the circumstances, it is possible to mitigate or even eliminate this liability.

Any income received by the Personal Representatives in the course of the administration is subject to Income Tax and must be disclosed to HM Revenue and Customs by the Personal Representatives.

Sometimes beneficiaries may decide to vary the terms of the distribution of the estate and the tax implications of this need to be considered. In some circumstances, this may result in a tax saving or may avoid adverse tax consequences for the person giving up his or her right to benefit from the estate.

Do you need advice?

For further advice on the administration of estates, Wills, Lasting Powers of Attorney and other private client matters contact Brenda Smyth or one of her colleagues at AMD Solicitors 100 Henleaze Road, Bristol BS9 4JZ, Phone 0117 962 1205, email or visit our website

This article is provided for general information purposes only and represents our understanding of the relevant law and practice as at the date of uploading. This article should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.

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