Guidance around Inheritance Tax, Probate and Agricultural Property Relief

In response to a Choice Magazine reader’s enquiry, Keebles’ Senior Associate Natalie Sheldon has provided some advice and guidance around Inheritance Tax, Probate and Agricultural Property Relief.

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Guidance around Inheritance Tax, Probate and Agricultural Property Relief

Question:

I am currently appointed an executor to my friend’s Will, alongside a firm of solicitors. My friend is not married, is still living and with no family. The estate will unfortunately attract death duties. Is it true that if these are not paid within three months of (their) death (previously six months?), then the executors become liable for the full amount?

If that is correct, then I may decide not to remain as an executor. In that event, do I just write to the solicitors who are holding the original Will, or must my friend write (and not offer an alternative executor) and/or must the Will be altered to reflect the change? Or can the correspondence be attached to the Will as a codicil?

Also, my friend’s property has land associated with it and which for over 20 years has been rented as a grass keep to a local farmer. Will the land attract agricultural relief against the estate?  Or must my friend have been actively working on the land for their own purpose?

Natalie advises:You must pay Inheritance Tax by the end of the sixth month after the person died. For example, if the person died in January you must pay Inheritance Tax by 31 July.

“Executors must make sure the tax affairs are settled before distributing the estate. If solicitors are also appointed, they will know the procedures in place.

“If you want to step down as an executor there are different options available to you.”

Have power reserved to you

Natalie says:In the context of probate, ‘power reserved’ means the postponement of an executor’s right to the grant of probate in a deceased’s estate. It applies where one executor does not wish to assert his or her right to the grant at present but does not wish to relinquish it totally either.

“Formal notice would be given to you by the solicitors who are the other executors acting with power reserved.”

Renounce as an executor

Natalie adds: “If you want to permanently free yourself of the responsibility of dealing with the estate, you will need to sign a document called a Deed of Renunciation.

“Once you have renounced, your appointment as executor is cancelled. The solicitors who are acting would be able to prepare a deed of renunciation for you.

“Agricultural property relief can be available on death on land that is let to other farmers, but it depends on the type of tenancy or agreement in place, and the involvement the landowner had in maintaining the land amongst other factors.

“Specialist advice should be sought on this by your friend to ensure the steps taken now mean there is the best chance of qualifying for agricultural property relief.”

If you have any questions arising from the issues discussed above, please contact us.

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