Delay in applying for a grant of probate can be costly.
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While delay in winding up the affairs of a loved one might be understandable in such exceptional circumstances, it is important that people are aware of the financial dangers this can pose.
Although there is no time limit on applying for a grant of probate, there are nevertheless important deadlines, which if missed can have serious financial repercussions.
Paying Inheritance Tax
Where Inheritance Tax (IHT) is due it must be paid within six months of the date of death. If that deadline is missed interest will start accruing on the tax owed and fines can be imposed. It is therefore important to make the most of the first six months following the death to value the estate and make arrangements for the tax to be paid.
Entering into a deed of variation
You have two years from the death to enter into a deed of variation. This allows beneficiaries to change or redirect their share of an estate, thereby reducing the liability for Inheritance Tax.
The non dom spouse exemption
Similarly there is a two year cut-off date for claiming the non dom spouse exemption to allow the surviving spouse the right to inherit their late partner’s estate free of tax.
Pensions
There is also a two year rule that must be observed in order to benefit from tax-free lump sum pension payments.
Recovering losses on share sales
The rules allow you to claim IHT relief when you sell shares and other qualifying investments that were part of the deceased’s estate at a loss, but this must be done within 12 months of the date of death.
