Estate Expense Finance to Cover IHT Shortfall

The Scenario

We were recently approached by a partner in a law firm, who had been appointed as a professional executor for an estate.

This particular estate presented several complex challenges:

1. It comprised two properties, both requiring repairs to obtain necessary certifications for property insurance.
2. The estate lacked sufficient cash to cover an inheritance tax shortfall owed to HMRC.
3. The sale of one property was blocked due to it being tenanted.

They were unable to sell the properties or pay the tax liability without an injection of capital, but a loan was proving very difficult to source.

Thankfully, they approached us to explore a bespoke solution.

The Solution

Recognising the intricate nature of the situation, our specialist probate funder stepped in with a tailored approach. They were able to look beyond the surface-level issues with the properties and see the bigger picture of this estate’s potential.

Working with lending professionals who are experienced in property matters is crucial for raising finance against an estate, as property is almost always the most significant asset available to liquidate.

And property is rarely straightforward – especially where there may have been a lack of attention ongoing maintenance afforded to it in the later stages of an individual’s life.

Our partner was able to provide:

1. Flexible Funding: An Estate Expense Facility of £100,000 was underwritten.
2. On-Demand Access: The facility could be drawn down as required to address various estate expenses.
3. Tax Resolution: The inheritance tax shortfall to HMRC was covered, removing a significant obstacle in the probate process.
4. Property Maintenance: Funds were available for necessary repairs, enabling the properties to meet certification requirements for insurance.

And for our client:

• It provided immediate liquidity to the estate.
• It allowed for the gradual use of funds as needed, potentially reducing interest costs.
• It facilitated progress in the probate process by covering the tax shortfall.
• It enabled the executor to maintain and protect some of the estate's assets by funding necessary repairs.