In June 2021 I and other members of my family were contacted by Fraser and Fraser, one of the firms of probate researchers featured on the television programme Heir Hunters.
To our great surprise, it told us we were the heirs of an unknown cousin – born as a result of an uncle’s wartime relationship – who had died without making a will.
This cousin had tens of thousands in savings and a house in the South of England.
After it confirmed that we were related to this person, the company proceeded to sort out the estate, including putting the house up for auction. It was sold for nearly £330,000 and we were initially advised that the inheritance would be paid to us by the end of July 2022.
Out of the blue: This reader and her family were contacted by a firm of probate researchers, which told them they were due to inherit money and property from an unknown relative
By Christmas, having heard nothing from Fraser and Fraser, I contacted the company and was told that the case had been in the hands of HMRC since May 2022, as inheritance tax was due.
We are obviously pleasantly surprised by this windfall, and grateful to Fraser and Fraser for tracking us down – though it makes us sad to think that this person died without any close family members to leave his money and home to.
But we are also wondering why the matter has not been dealt with by now, especially as one of my family members has lost their job and would really benefit from receiving the money. Another is struggling with care home fees.
Is there anything we can do to make HMRC sort out the tax situation more quickly? Anonymous, via email
Helen Crane of This is Money replies: It is a phone call that many people dream of: being told that a long-lost relative has left you in line for a completely out-of-the-blue cash windfall.
But the happy news was also tinged with sadness. You and your relatives never had the opportunity to get to know this cousin during their lifetime, having not been told about his existence as his father kept the relationship a secret.
You were also upset to learn that they died without close family to pass their savings and property to.
In total, you and six other family members were named as beneficiaries of this person’s estate, meaning you would be set to receive tens of thousands of pounds each.
CRANE ON THE CASE
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These are potentially life-changing sums of money, and you told me that you feel very lucky indeed – as anyone in this situation would.
But passing on the money or property of someone who has died is not a quick or easy process.
The average time it takes for an inheritance to be paid is between nine months and a year, but it becomes even more complicated in situations like yours where no will has been made – also known as someone having ‘died intestate’.
The legal process is complicated, and it is no surprise to me that you and your relatives are finding it hard to work out what is going on.
I have tried to find out what is happening with this money, which you first learned about nearly two years ago.
Currently, the money is in the hands of a firm of solicitors that have been appointed as the estate’s executors. Usually, money and assets from an estate are not passed on to beneficiaries until all of the inheritance tax due to HM Revenue and Customs has been paid.
In the UK, inheritance tax is owed when the value of an individual’s estate is more than £325,000, although the threshold can be higher if you own a property that you pass to your direct descendants – read a This is Money guide to inheritance tax here for full details.
With the home you have inherited having already been sold for more than the £325,000 threshold that applies here, plus savings existing on top, it means that a chunk of what you and your relatives are receiving will need to be handed over to the taxman.
You’ll also need to pay fees to Fraser and Fraser out of the money you get, and the solicitors will also need to be paid.
Beneficiaries will usually see 40 per cent inheritance tax imposed on anything over the £325,000 threshold for the estate. In cases like yours the tax is normally paid by the solicitors dealing with the estate, before they pass on the remaining money to the beneficiaries.
Auctioned off: The property from the estate has been sold at auction, but the beneficiaries seem to be no closer to receiving the money
Working out how much tax is due takes time – and this seems to be where the delays have occurred.
When dealing with an estate on which inheritance tax is due, a solicitor must apply for HMRC ‘clearance’ to release the funds. They must sign a form saying that all the money from the estate has now been received, and that the amount of tax owed on it is not going to change any further.
HMRC will then send them a letter back confirming that there is no more tax owed, and this is usually the point that the solicitor will release the money to the beneficiaries. The reason for this is that they don’t want to release the money to the beneficiaries, and then discover later that more tax is owed.
This takes me to the next twist in this tale. Since you were first contacted, it has been discovered that your cousin had purchased a pension annuity, which will pay out in May. Unfortunately I have been unable to find out how much this is worth.
Because the pension money hasn’t come in yet, the solicitor can’t get the HMRC clearance, and won’t be able to get it until after May.
After that, there is a further step that the solicitors will need to go through – applying for probate.
Getting probate is necessary so that a deceased person’s estate can be divided up, or properties sold, and the executors must apply for probate – giving them the ability to access their accounts and manage their estate. In your case, it is the solicitors that will apply for this.
Inheritance tax must be sorted out and paid before probate is officially granted.
At the end of last year, there were reports of reports of long probate delays in the process. When an application has been submitted as a paper form or a mistake has been found, lawyers have reported it taking as long as six months to get sign-off.
Sign-off: Tax clearance usually needs to be applied for from HMRC before any money from an inheritance can be passed on to beneficiaries
So where does all of this leave you and your money?
I spoke to Fraser and Fraser, explaining your situation and the fact that some of your family members had a fairly urgent need for the money.
I am pleased to say that the firm has now arranged with the estate’s solicitors to pay you and your family an interim amount of £300,000 – known as a ‘partial distribution’ of the money from the estate. You have told me you and your relatives were very grateful for this.
HEATHER ROGERS ANSWERS YOUR TAX QUESTIONS
You did not all receive identical amounts, as the amount received depends on the person’s exact relation to the deceased.
The rest is set to follow once the tax affairs are concluded, and as I mentioned there is also potentially some money from the pension annuity yet to come.
HMRC was unable to give me an estimate for the amount of time it would take for the tax clearance to be issued, and said it would not discuss individual cases.
Fraser and Fraser said that it was also unable to estimate when the rest of the money would be paid to you and your relatives, as it couldn’t predict how long it would take to get tax clearance – but I am glad that it was able to organise the payment of the majority of the money.
A spokesperson for Fraser and Fraser said: ‘We are pleased we were able to step in to help, and settle the case. Despite our best efforts, our hands are often tied by third parties.
‘Due to the nature of our work, we must involve third parties, usually to request necessary information and as a result, delays can occur.
‘This is incredibly frustrating for us, and we sympathise with our clients, for whom we act as point of contact.
‘Situations like this are cause for 90 per cent of complaints from our clients, and while it is out of our control, we are dedicated to provide a transparent and worthwhile service.
‘In this case, as with the majority of our cases, we are happy to have settled the case with a positive outcome for the beneficiaries.’
Vistaprint smashed it when I broke my mug
Reader Robert emailed this week with a nice story about the bespoke printing company, Vistaprint.
He said his wife ordered a personalised mug to celebrate him getting a new job, but he accidentally broke it.
Robert contacted Vistaprint with the order number to ask for an identical replacement – but to his surprise, the firm sent him a new mug for free a few days later.
I’ll drink to that.
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