Nick

Hi, I have been nominated as an Executor (one of two) in a Will for somebody who is terminally ill and the prognosis is around 12 months or so. There are 7 familial beneficiaries, each of whom will receive equal shares of the estate. In preparation, we have started to gather paperwork and research the different elements of the Estate. The property, savings and personal effects appear to be straightforward. Our preliminary estimates suggest that after permissible IHT allowances are taken into account that the estate will exceed the threshold and IHT will be payable. The person holds Plant Breeders Rights for several varieties of plants in the UK, Europe, Canada, the USA, Australia and New Zealand. These plants are bred and distributed internationally by a Dutch based company, who have the contractual right to do so. It is our understanding that the rights are likely to continue for 10-15 years (depending on the plant varieties). Royalty payments in Euros, are usually paid 4 times per year, the recipient is a UK national, who has always resided in the UK and currently pays Income Tax on these Royalties. The Plant Breeders Rights and Royalties are included as part of the will to be shared equally between the 7 familial beneficiaries. The annual Royalties received vary annually, however, for the last 2 years they have been around £100,000 (Sterling) per annum. Assuming that all of these Royalties will be subject to the full IHT rate of 40% (due to other elements of the estate exceeding the IHT threshold). I have the following queries:- 1.Could you please give an estimate as to how these would be valued for IHT purposes, with an estimate of the amount of IHT payable at death. 2. I understand from talking to an HMRC advisor that there will be a future value assigned to the Royalties of around 12 months or so for IHT purposes, is this correct? 3. Additionally, I understand that due to the ongoing nature of the Royalty payments that an annual return, using the Trust and Estate Tax return (SA900) will need to be returned along with payment during the ongoing period of administration. Is this correct? 4. As the Royalty payments originate in Europe, what category of income will they be classed as for the SA900? And would these Royalties be subject to an Income Tax rate of 20% before being distributed to the beneficiaries)?