Administering the affairs of a deceased person can be a long complicated business depending on the complexity of the estate. Following changes made to the taxation of estates in the 2007 married couples and civil partners are allowed to transfer any unused portion of their Nil Rate Band (IHT tax threshold) to the spouse or partner on the second death. The responsibility however falls on the executors of the estate to make an application to HMRC if necessary and must made within two years from the date of the second death.
It is rare in the present economic climate for the administration to be delayed for any significant period of time but circumstances may prevail where it is simply not possible. Long term illness or simply tracking down the executors may result in delays. It is important to remember the use of any unused nil rate band will be lost if the application is not made within the required time and the Revenue will take a hard line over such matters despite having minimal discretionary powers to accept applications out of time. In essence if the estate of the second to die is in excess of £325000 (the current threshold for IHT) and no application is made if available everything over that sum may be taxed at 40%.
Being appointed any executor carries with it responsibilities often exposing those entrusted with the job of scrutiny and possible liability if mistakes are made. This is particularly relevant when the executors do not stand to benefit from any part of the Will and are simply administering the estate for others. There are no specific deadlines in dealing with the probate of deceased person but the same does not apply in the case of taxation. There are strict deadlines with regard to Inheritance Tax which must be met. Failure to meet these deadlines may result in penalties interest payments or worse still a significant tax liability which may have been avoided.
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