Inheritance tax

But family members do not inherit the debts, they are automatically cancelled, and if there is no negative inheritance, there is no need for a negative inheritance tax.

Surely the debts are inherited in a manner of speaking, ie if a creditor knows their debtor has died are they not entitled to their share of the swag?

What swag?

Obviously if the deceased had more assets than debts, the debts would be paid from the assets. If the debts exceed the assets, then the creditors would get short-changed, but would basically get all the assets and the heirs would get nothing, apart, perhaps, from low-value personal effects.

Perhaps I should have made clear that I'm (and assumed the OP was) talking about the estate being in net debt. Then the heirs would not be expected to pay up.

Thanks to the good answers to my really badly worded question. Reading it back after posting I was expecting some flaming. It was a hypothetical question on a topic that really interests me. The value of todays houses means that if one is the sole heir to even a modest house, one would need to take out a mortgage to pay the inheritance tax.

Flaming? On uk.finance? Never!

Well, hardly ever! :)

Thanks Ron, I assumed we were discussing a deceased that had an estate worth something. In this case, a rich deceased who has been dodging creditors, how do the creditors find out their debtor is dead? Can the inheritors (who may be unaware of the debts) inherit the lot or does the willmaker/solicitor/executor have to advertise these assets and the debtor's death?

Why did you assume that? The OP proposed the concept of negative IHT, and since IHT is levied on the net value of the estate (except for the first £275k), the only way you could have negative IHT is if the net value of the estate were itself negative, or less than £275k. I think if estates worth only (say) £175k were to get an IHT "cashback" of £40k, we'd have heard about it before now! :-)

They pay someone to read the papers for the death notices.

The executors are expected to know (don't ask how) about all assets and debts of the deceased, and draw up a complete account to come up with a bottom line.

If a forgotten creditor turns up out of the blue after all the assets have been distributed, I believe the executor can be held personally liable. Insurance is available to come such eventualities.

But as the occupant of this house had died it would be empty, so one could sell it, couldn't one!

tim

EVERY local rag in the UK?! And does every death have to be followed up by a notice? There are about five notices a week in our paper.>

It has been suggested that publishing the death in the London Gazette and giving details about how creditors could make claims there is sufficient.

In message , fishman writes

Who is the 'one'? The estate would, in effect, pay the tax, if necessary by selling the house.

There are ways of reducing the IHT liability, especially if the house is jointly owned by man and wife.