Q: My mother died a few weeks ago and as an only child it is up to me to sort out her estate — my father passed 10 years ago. A friend of mine has expressed an interest in buying her house. Can I just sell it to her to get things rolling or do I have to get probate first?

A: I am sorry to hear about the loss of your mother. Sorting out an estate, as a person’s possessions become known on death, needs to follow a legal process called probate when there is a will. If there is no will then Letters of Administration need to be applied for. This means, unfortunately in your case, you can’t jump steps and sell the house. You can however get the ball rolling, get valuations and agree the sale in principle with your friend if you want to.
Firstly you, and any other executors of your mother’s will, need to work out the value of her estate for inheritance tax purposes. This comprises all her assets less any jointly owned assets that are passing to the survivor and some gifts she had make in the previous seven years. Also any assets owned in a trust or overseas. In addition, subtract any debts such as mortgages or loans owed solely by her, and the cost of the funeral.
You don’t say exactly when your mother died, but the rules are slightly different for people dying before January 1 2022. The government website gov.uk/when-someone-dies has good guidance.
You need to send your estimate of the inheritance tax (IHT) owed to HMRC, and pay at least some of it, before you will be granted probate. If no tax is owing you can apply directly for probate. You don’t say what happened when your father died in terms of using his IHT allowance. But if everything was left to your mother, and the family home is now being left to you, you should have £1 million of inheritance tax allowance to use up before tax must be paid.
If not, your mother has an IHT exemption of £325,000 rising to £500,000 with her share of the family home if it is being left to a direct descendent such as yourself. Plus she can use any unused portion from your father’s exemption. After the exemption has been reached, inheritance tax is payable at 40 percent on the remainder of the estate. Some gifts made within seven years will attract a lower rate of tax as the amount owing tapers off over the qualifying period.
Once HMRC has received your IHT calculation and tax has been paid, you can apply for probate, which costs £273 for estate worth more than £5,000. Because of Covid 19, the Probate Office is warning it is taking up to eight weeks to process applications. Only when you have received the ‘grant of probate’ can you start distributing your mother’s estate according to her wishes and sell her house to your friend or any other buyer.

Rosanna Spero has been writing about money, property and small businesses for more than 30 years. She has worked for a range of magazines and newspapers, with much of her working life on the Money Mail section of the Daily Mail. She has also written a number of books on the subject. Email her with your questions at rspero@thejc.com