Inheritance tax

Skippy47_2

I am married but separated and my husband was the main earner. If anything happens to him, I will get 3 x his salary £330,000 + £200,000 life insurance. With inheritence tax, do I understand correctly that I will have to pay 40% tax on anything over £300,000, and if so, how can I get round this? We're both in out forties, but you never know.

dzug1

As long as you are still married then anything you inherit from him will be exempt from IHT.

At least until your death

simpywimpy

and you would then qualify for double IHT allowance on your death so 600k without tax.

whitfreak

simpywimpy wrote: »

and you would then qualify for double IHT allowance on your death so 600k without tax.

Well to be more precise your IHT nil band would be 300k + whatever of the 300k your husband didnt use in legacies to children, or well anyone who isnt his wife. (working on current figures)

If I remember rightly life assurance policies can be written into trust so they wouldnt form part of his estate. But you'd have to get professional advice for that, and would only be worthwhile if there was significant figures going to children etc (i.e. using his nil band). Or if your seperation turned into a full divorse, as you'd lose the ability to transfer assets between you IHT free as you wouldnt be husband and wife.

EdInvestor

Skippy47 wrote: »

If anything happens to him, I will get 3 x his salary £330,000

This sounds like a pension death benefit, which is paid outside the estate and free of tax.

+ £200,000 life insurance

Life cover is usually written in trust so it is also free of IHT, but try to check.

lcharm

EdInvestor wrote: »

Life cover is usually written in trust so it is also free of IHT, but try to check.

Only written into trust if requested, if he had a good insurance broker who recommended it, or it's in his will.

If it's his wish for it to be a lump sum payment then it may not be, but if it's a lump sum to generate an income then it probably is. Best to check