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Transferring the Nil rate band - retention of key documents

TRANSFERRING THE NIL RATE BAND - Retaining documents on first death

The provisions allowing any unused part of the nil rate band of a spouse, to be taken into account on the "second death" have been around for some time now. If the full allowance is available this represents a potential tax saving of up to £130,000 (depending on the taxable value of the estate). In order to make the claim on the death of the second spouse or civil partner form IHT 402 needs to be completed and the figures copied onto the relevant part of form IHT 400.

However, some practical problems can arise in being able to make the claim on the IHT 400 and 402 forms, and provide the other information requested if the Personal Representatives dealing with the second death do not have sufficient information about the estate of the first to die.

In the event that you are dealing with the estate of a person, who is survived by a spouse or civil partner it is very important to retain all of the relevant details of the estate as follows:

  • a certified copy of the death certificate
  • a copy of the original Grant of Probate
  • a copy of the Will
  • a copy of the Estate Account
  • a copy of the Inheritance Tax Return whether it is the shorter form IHT 405 or, a full IHT 400 and all relevant Schedules.
  • if the first spouse or civil partner dies intestate the Estate Account and tax forms should be kept in a safe place, together with the original Grant of Letters of Administration.
  • a copy of any deed of variation relevant to the estate of the first deceased

Furthermore, on the second death you will need to know the venue and date of the marriage or civil ceremony and the last known permanent address of the first deceased for form IHT 402.

Most married couples leave "Mirror Wills" and therefore, it is highly likely that the same Executors will be appointed in both Wills. In such cases you would expect the Executors to retain copies of these important documents on the "first death", or at least have some knowledge or documentation available when dealing with the "second death". However, circumstances can change, for example if the second death occurs several years after the first, and in the meantime, one or more of the Personal Representatives may themselves have died, or become incapacitated and therefore cannot be relied on for personal knowledge of the first death.

Also, the surviving spouse can change their Will, appointing different Executors, in which case the Executors of that Will have to be in contact with Personal Representatives who dealt with the first death, to determine how much, if any of the nil rate band was utilised on that death. Retention of these relevant documents is therefore, imperative.

COMPLETING THE PROBATE FORM ON THE DEATH OF THE SECOND SPOUSE OR CIVIL PARTNER

There is also information that is required for the PA1 form (Application for Probate) which would be readily known by the surviving spouse or civil partner but would be harder to obtain later. The executors of the surviving spouse or civil partner will need the know the information below. The surviving spouse or civil partner should record the following information about themselves and keep it with the information above:

a)      brothers or sisters who survived the deceased

b)     brothers or sisters who did not survive the deceased

c)      children of b) who survived the deceased

d)     half-blood brothers or sisters who survived the deceased

e)      half-blood brothers or sisters who did not survive the deceased

f)       children of e) who survived the deceased

g)      whole blood uncles or aunts who survived the deceased

h)     whole blood uncles or aunts who did not survive the deceased

i)       children of h) who survived the deceased

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