UKC

/ Inheritance tax rebate

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redsonja - on 15 Apr 2018

I'm not sure if anyone has been in this situation, but I would welcome your thoughts/ experiences. It's sort of long winded, but I will condense it as much as I can. My mum died 6 years ago. For some reason she didn't include my stepfather in her will. They had been married for 25 years. So, my Stepfather made a claim against her will, but unfortunately, this resulted in him and my sister falling out big time, and my step father refusing to say what he wanted from the will. We had 3 solicitors ( one each for my sister, stepfather and me) plus another to deal with probate. None of the solicitors put any pressure on my step father to say what he wanted and it took 3 years before he said he would agree to 25%. Then yet another year to deal with all that and then we put my mum's smallholding up for sale. We got an offer after only 6 weeks, but despite the solicitors saying it would take 2-3 months and the buyer saying he wanted a quick sale, it took 6 months before it all went through. The solicitor just dragged it on and on and we were phoning almost every day  to try to get things moving. Shortly after mum died, the solicitor said we should pay the inheritance tax (over £100,000). she said HMRC were adding interest to it every month. She said my step father would be exempt from inheritance tax, so when we finally agreed to what he would get we would get a % of the inheritance tax refunded. So, after the house was sold the solicitor applied for the inheritance tax rebate and 4MONTHS later HMRC wrote and said we were 19 days too late in applying for it and the request was refused. The solicitor appealed, this was 2 months ago, and we still have not heard anything.. Has anyone else had this experience and how likely do you think it is that they will let us have it? it's £42,000, so not exactly a small amount. So far, between the 4 of us we have spent over £100,000 on solicitors and £100,000 to HMRC. That's about 30% of Mums estate. Not only that but the solicitors were just so slow, it was horrendous, and 19 days was about the length of time it took them to return a phone call. Does anyone have any advice please?

David Cohen - on 15 Apr 2018
In reply to redsonja:

Go so a proper probate / estates solicitor. A member of STEP should be your first port of call as they can advise on the issue of IHT and also if the estates were managed appropriately or whether some of the solicitors have been negligent.

Claims for reasonable provision are a nightmare and the subsequent death of your mother would be likely, dependent on the terms of her will, to be a significant complicating factor.

Whether claim for reasonable provision is exempt from the calculation for IHT is on the face of it surprising as I cannot understand how the method of division of an estate could impinge on the basis of the calculation of the gross value on which IHT is based.

A final bit of avuncular advice, try and reconcile the familial dispute, few things are worth a long standing family disagreement.

https://www.step.org/

marsbar - on 15 Apr 2018
In reply to redsonja:

So you've lost 30% to solicitors and stepfather has 25%.  

The only people who win when families fall out are the lawyers

Would have been cheaper all round to give him the money with conditions it went to you when he dies.  

marsbar - on 15 Apr 2018
In reply to redsonja:

Is this Scottish law or England/Wales, it often makes a difference?  

Sorry for your loss BTW. 

Post edited at 11:40
redsonja - on 15 Apr 2018
In reply to marsbar:

Yes, I totally agree about the lawyers. They made no effort to help us resolve it, but rather made it worse. I suggested at the start that we have 1/3 each but my sister didn't want my step father to have anything. Then I offered my stap father to stay at the small holding for the rest of his life but ha said he wanted the money.

redsonja - on 15 Apr 2018
In reply to marsbar:

English law

David Cohen - on 15 Apr 2018
In reply to redsonja:

Can I suggest that blaming the lawyers is generally unfair, lawyers take instructions from their client's and I know of no lawyer that would advise the client to behave unreasonably, it is more likely that the client was unwilling to take reasonable advice than the lawyer being a tw*t.

Caveat I am not a solicitor but married to one who practices in this area (and divorce) and clients not taking advice and wanting to 'have their day in Court' are the bane of her professional existence.

If you think that the lawyers have over charged seek a review of the bill (they have to send you enough information to consider whether the costs were reasonable) although you have a limited period to do this.  Also be very careful in this area as this challenge can be v. expensive and there are some charlatans out there who will look to screw you in this regard. Again good reason to go to a STEP qualified practitioner.

redsonja - on 15 Apr 2018
In reply to David Cohen:

I'm certain this is true in the case of my step father. He said he wanted to go to court and let the judge decide as he felt he would get more that way. In fact, he did go to court and the judge merely asked why we hadn't resolved anything ourselves and gave us 6 months to do so. I cant tell you how frustrating it has all been.

wintertree - on 15 Apr 2018
In reply to redsonja:

You don’t say who the executor(s) were which affects potential advice.

> Does anyone have any advice please?

Sorry if my advice and commentary seems blunt - I have faced a similar situation but it didn’t go so far south.

0) Everyone involved was insane not to settle immediately.  Most English wills are close to worthless in these circumstances.

1) Stop worrying, fretting or stressing.  You seem to be quite wound up about this.  Step back - a windfall of money you didn’t earn - is it worth being upset about?  So far emotions have taken you all down a path that has burnt £100,000, potentially £150,000 with regards the refund.  Protect your core character over money.

2) If you ever do this again, low ball the property valuation as far as the agent doing the Red Book valuation is happy to - if it sells for more pay the additional IHT, if it doesn’t, there is less to be refunded.

3) If it took 19 days for the solicitors to return a phone call, then you presumably  didn’t phone them for perhaps 14 working days in a row after the first phone call.  You’re never going to the top of someone’s priority list by being quiet.  Ideally the executor would pick solicitors who don’t prioritise based on clients ringing them up every day, but if not you have to work it...  We all have bad periods where we end up prioritising our work according to fire-fighting priorities.

4) If you do want more stress and to loose more money, you could try and decide if incompetence from the solicitors helping the executor with probate, or (if separate) those helping the executor with conveyancing, contributed to being late for the HMRC refund deadline.  If so investigate the complaints procedures at their level, then the ombudsman and give them a punt before going legal.  The solicitors will be insured to the eyeballs for this stuff, but you might sense a loosing battle...!  

My non expert opinion is that so many parties were involved that it’s no surprise the sale too ages, and you’re going to struggle to pin the blame to any of the solicitors.  

What isn’t clear to me is why the executor(s) didn’t sell the property immediately.  Unless there was an injunction from the step father they were free to do this.   If I were the executor I would have done so, because of my personal liability to the inheritors of the estate is unable to pay out.

 

redsonja - on 15 Apr 2018
In reply to wintertree:

Hi there. My sister and I were executors.  We were told that we couldn't sell the property because my step father was living there and we couldn't sell it until the will had been settled.

wintertree - on 15 Apr 2018
In reply to redsonja:

Thansk.  Sorry I missed the part where he was living there.  Obvious really!  More makes sense to me now.

As you are an executor don’t get the step dad’s hopes up on a rebate - try not to mention it - as I think he could hold you personally liable for his share of it regardless of weather HMRC pay out or not.  Hopefully that would fall on your solicitor’s insurance but you don’t want to go there in terms of stress, hassle and potential liability.

 

 

marsbar - on 15 Apr 2018
In reply to David Cohen:

Just to be clear, I'm not blaming the lawyers, I'm just warning others reading this that it is better to resolve within the family if possible.  Better to give a little extra to a family member than waste it and more by fighting.  

marsbar - on 15 Apr 2018
In reply to redsonja:

It seems you've been reasonable and your sister and step father have dragged it on.  

Tempting as it is to fall out with your sister over the 42 000 I'd try to avoid it.  

I'd write to HMRC in the first instance and ask them very politely if they have actually received your appeal.  Ask them for how long for a decision.  

Explain that the family situation and the number of solicitors involved has caused delays beyond your control.  

Meanwhile hassle whichever solicitor is supposed to be appealing it.  Phone every other day.  You can't just leave solicitors to get on with stuff you have to phone them and nag them.  You'd think this wasn't efficient but it does seem to work. 

Deadeye - on 15 Apr 2018
In reply to redsonja:

Highly unlikely to get a refund from HMRC when you have missed a clear deadline.  Sorry.

redsonja - on 15 Apr 2018
In reply to marsbar:

I phoned the solicitor on Friday to ask if she had heard from HMRC and she said no but she would make a note to contact them early next week 

marsbar - on 15 Apr 2018
In reply to redsonja:

Phone Tuesday and Thursday then.  

If you have missed the deadline and the appeal is rejected I guess you will have to try the solicitors complaint proceedures.  

redsonja - on 15 Apr 2018
In reply to marsbar:

OK thanks, I will do that.

David Cohen - on 15 Apr 2018
In reply to redsonja:

I would not recommend using the complaints procedure, you need specialist advice not a mealy mouthed equivocal letter apologising 'if you feel let down'.

 

redsonja - on 17 Apr 2018
In reply to redsonja:

I phoned the solicitor this morning to ask if she had contacted HMRC. she said no, but she would leave herself a note to do so. She said this last Friday aswell. She sort of made me feel I was being a nuisance

timjones - on 17 Apr 2018
In reply to David Cohen:

> I would not recommend using the complaints procedure, you need specialist advice not a mealy mouthed equivocal letter apologising 'if you feel let down'.

I would seriously recommend explaining that if they donlt resolve the issue you will contact the Law Society and make a complaint.

We suffered from tardy solicitors with my fathers estate and after explaining that this is what I would do they wound up waiving all of their considerabe fees for the work.


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