Father's estate

[croyde]

My dear 'ol dad died last year and my younger brother dealt with the financials and organizing the funeral etc. I met him last night and he tells me that dad had a small sum in his bank account. Around £9k, which currently resides in my brother's bank account.

Dad didn't appear to have left a will so the money automatically goes to his ex wife (not our mum) in Germany but she says that us three brothers should have it.

There's no fighting and I'm really not bothered whether we get the money or not. I'd rather dad was around to enjoy it but my brother is worried about the law and tax implications if his ex wife were to give us £3k each.

Anyone know how this all works in order to keep it all above board.

Cheers.

[jfbrin]

Imho, Your brother, who I assume is the executor, should get a letter of instruction from your ""step mum" relinquishing her entitlement to the money and instead allocating it to you and your brother as a "deed of variation". That way, the money effectively passes direct from your late father's estate to you and your brother thus bypassing any tax issues that may apply to you step mother gifting her money to you. That letter should cover you and your brother from any come back.

[croyde]

Thanks for that. He wasn't officially the executor, he just took responsibility for my dad's affairs as he was able to stay in the area.

Dad's wife's English is not very good so I presume I can draft a letter using those words that you quoted and she can sign it.

Do we just keep the letter or does it then have to be sent somewhere?

Thanks again.

[jfbrin]

Third time typing as when I tried to add a smiley, my posting disappeared!

Briefly, the deed of variation option applies for one year after your father's death.
It's mainly used for larger sums and avoids potential IHT issues should the donor die within 7 years (German tax law aside)
If more than one year has passed, then she is just gifting her money to you.
So an appropriately worded letter drafted by you and signed by her to be kept by you in the event of there being any challenge in the future should be sufficient..

I am not an expert but I would expect HMRC to be looking for bigger fish to fry! No smiley!

[PurpleMoonlight]

What country what he living in at time of death?

When you say 'ex wife' do you mean they were divorced or she is his widow?

Is the £9000 the total value of his estate or just part of it?

[croyde]

He lived here in the UK and they were still married but lived apart. That is the total of his estate.

Thanks.

[PurpleMoonlight]

In that case she inherits it under the intestacy rules.

If she wants to waive it so that the three children get it she should do so in writing just in case there is some dispute late on.

Strictly speaking, someone should apply for Probate as the estate is over £5000 but I would guess that many don't bother as there is no IHT to pay.

Any funeral costs are normally deducted from the estate.

[croyde]

Cheers. The funeral costs were deducted. His bank dealt with all that.

So would the 'variation' letter mentioned earlier be fine for her to sign if she wants to waive her right to the rest of his estate.

Thanks for all the help chaps.

[Simpo Two]

If I was the Executor then a signed letter from the ex-wife saying that she waives her right to the money would do - then I could write the cheques/transfers. To make it easier for her/reduce the risk of her changing her mind I'd send her the letter pre-typed with an SAE so all she'd need to do is sign and return.

[STattam]

jfbrin said:

Third time typing as when I tried to add a smiley, my posting disappeared!

Briefly, the deed of variation option applies for one year after your father's death.
It's mainly used for larger sums and avoids potential IHT issues should the donor die within 7 years (German tax law aside)
If more than one year has passed, then she is just gifting her money to you.
So an appropriately worded letter drafted by you and signed by her to be kept by you in the event of there being any challenge in the future should be sufficient..

I am not an expert but I would expect HMRC to be looking for bigger fish to fry! No smiley!

Deed of Variation can be done anytime, 2 yr window is for tax effect to be treated as if late father has gifted it. Would seem a bit extreme for these numbers. The main consideration is whether his wife has an estate over the nil rate band or not and whether she is domicile UK.