Legal Fees come out of estate?

busterjones

Just trying to work out tax liability on a modest inheritance

I have a GROSS estate value from the solicitor and then they minus any costs (funeral etc.) to give a NET estate value - which they say needs to be submitted in the Inland Revenue Affidavit.

This is before their fees have been deducted.

I am trying to work out what number I need to pay tax against - is this the NET (i.e. estate minus funeral expenses etc.) minus the legal fees?

Should this also be the NET value submitted in the Inland Revenue Affidavit?

Tks

dennyk

Is this a very old estate? I don't believe the Inland Revenue Affidavit has been in use for some time now; it's now Form SA.2.

From looking over the form instructions, it doesn't appear that solicitor's fees would be included in the liabilities on this form, only the liabilities of the deceased themselves accrued before death and the funeral costs specifically.

I don't believe you personally would need to pay any tax when filing this form; the form details the state of the entire estate with respect to assets and liabilities, and is filed before the estate is actually settled, debts are paid, and assets are actually distributed to beneficiaries. You will report an estimated benefit amount that each beneficiary is expected to receive, based on the estate's net value and the distribution according to the will, intestacy laws, and any directly transferred assets, but this is just so Revenue has a general idea of which beneficiaries are likely to owe tax and about how much they're each likely to receive, so that if any beneficiary reports a significantly smaller amount on their own CAT filing (or doesn't file at all), Revenue will know that something is up and it might be time for an audit of said individual. Eventually you and/or the other beneficiaries will report (and maybe pay) CAT on whatever assets you actually receive from the estate yourself (which will be after the solicitor's fees and other expenses are paid out of the estate), but right now this form is just to start the official probate process, not for paying tax.

busterjones

That's extremely helpful and makes perfect sense - thank you!