Query on Probate & Inheritance tax

Hi guys

I wonder could anyone help me on a problem with the above. My father died intestate in 1997 ,leaving a wife and 6 adult childern. Subsequently my mother applied for and was granted a grant of administration just last year. Unfortunately, she died within days of receiving it. She willed her interest in the house to me for my lifetime. 4 of my siblings are revoking there interest in the house to me, I will have to negotiate a payment to one of them to buy out their share. The House is now valued at €370K. At my fathers death it was valued at €120K.

My query relates to the tax situation. I understand that the estate is liable for probate tax since my father died prior to the tax being abolished. I was talking with revenue and they tell me there is also a possibility of a gift tax because my brothers are revoking there interest in the house entirely to me.

I am really unclear with what is the best way to proceed and avoid or minimise tax, as I am living on a fixed income.

Any help in sorting this out would be appreciated.

You really need proper, specific, personal advice but in broad terms:

1. On your fathers death on intestacy, your mother took 2/3 (80K) and 6 offspring took 1/3 ( 6.66K) each.
2. Your mother extracted a Grant but has since died without administering the estate so a second Grant needs to be taken out to your fathers estate.
3. I think someone ( the same person as above - probably you) will also need to take out a Grant to your late mother's estate.
4. Of the 2/3 interest you mother inherited she has left you a life interest in the property and there is a Revenue calculation to work out that value.
5. Of the 6 siblings, you are entitled to 1/6 of 1/3 of your fathers estate and a life interest in the 2/3 interest held by your mother. The remaining share is held by the remaining 5. 4 will "gift" to you or "disclaim" their share and you will buy 1 out.

There will very likely be a cost to you in terms of professional fees( unless you decide to d.i.y.and given that it is complex I would not advise that) , Probate Tax, CAT and stamp duty but much will depend on how you handle it. Is this your only residence i.e. is this where you live?

Depending on your age, other assets, debts etc.,etc you may be able to raise a mortgage for the costs on the security of the property if it is to all come to you in the end.

mf

Thanks MF, I know it is complex. It is my family home, and where I now live. Do you suggest a financial advisor, and where would I find someone specifically who deals with this kind of stuff. At present, i have made a personal application for probate on both my parents estates and need to go to the revenue commissioners for their stamp on the applications. My intention was to get the grant and then have the solicitor sort out the rest. Thanks again for any help you can be here. Regards Horusd

No - you need to talk to a solicitor. I'd be unhappy as a solicitor to let you off to do your own Probate(s) given the complexity of the situation and your very steep learning curve( sorry!). I'd be concerned that you would not end up with the correct Grant to enable the property to be adequately vested in you.

I very often have clients who would like me to oversee them taking out their own Grant of Probate leaving me to do the "bit at the end". I will not advise clients on this basis - particularly where there is such complexity.

There is a fairly complex issue here in terms of whether siblings gift to you or disclaim their interest - and its relevant at Probate stage.

You need professional advice specific to your circumstances.

mf

mf1 said:

There is a fairly complex issue here in terms of whether siblings gift to you or disclaim their interest - and its relevant at Probate stage.

Click to expand...

I'm interested in this... Would it be possible for siblings to "disclaim their interest" in a portion of their inheritance?

The scenario I'm thinking of is that prior to death, a parent made gifts of different sizes to several siblings. It was the understanding of all concerned that they were all entitled to the same share of money, but the money was gifted as and when the individuals needed it, so some got more when they bought property, needed it for a business etc. Others got relatively little before death.

The parent then died. According to the will, the estate is to be divided equally among the siblings. However, they unanimously agree (as do the executors), that the parent's intention was always that everyone would ultimately get the same amount.

Would it be possible for the siblings who got more before death to "disclaim their interest" in a portion of their inheritance, so it could be given to those who got less, evening up the overall pre- and post-death totals? This would save them from gifting it to each other with the consequent gift tax implications.