Inheritance Tax Article MoneySavingExpert.com Discussion

vixtrix

I bought my ex husband out of the marital home and so I own it now with a £50,000 mortgage. I have since remarried but I have written a will specifying that the house goes to my two children with my husband continuing to live in the house until death or cohabitation (this is because he has two children from a previous marriage that I don't want to inherit MY house).

My question is ... will my two children have to pay inheritance tax because they have inherited the house? It is worth approximately £350,000 but they would only inherit half each. Also does the £50,000 mortgage come off inheritance or not? I have a life insurance policy of £100,000 to pay the mortgage off and then the rest will go direct to my husband.

Any advice?

elliebean_2

vixtrix wrote:

My question is ... will my two children have to pay inheritance tax because they have inherited the house? It is worth approximately £350,000 but they would only inherit half each. Also does the £50,000 mortgage come off inheritance or not? I have a life insurance policy of £100,000 to pay the mortgage off and then the rest will go direct to my husband.

Yes, your children will have to pay inheritance tax. It is based on the value of your estate at death and currently payable on assets totalling above £285k. If you have a £100k insurance policy that pays directly into your estate on death and you have a £350k house with an outstanding mortgage of £50k your estate would be worth around £400k in total. So IHT would be payable at 40% on £115k = £46k.

DaveT_4

My father has recently been told by a "financial adviser" that his heirs will have to pay the full inheritance tax bill from their own funds (taking out a loan if necessary) before they can access any of the inheritance. Is this correct?

elliebean_2

DaveT wrote:

My father has recently been told by a "financial adviser" that his heirs will have to pay the full inheritance tax bill from their own funds (taking out a loan if necessary) before they can access any of the inheritance. Is this correct?

The executors have to pay the IHT bill by the due date (usually 6 months from the end of the month in which the testator died) in order for the estate to be administered. If it isn't paid by that date then interest may be charged. However, IHT on some assets (property, land etc) may be deferred and paid in instalments.

serendipitity

My mother is 62 and is going to insure herself for £50.000 so that in the event of her death the rest of the mortgage would be paid off. The house is worth £270.000. Would the £50.000 life insurane be exempt from inheretance tax if put in a trust?
Would i be able to change ownership to tennants in common as mum pays the mortgage but i pay all bills etc etc and half of all furniture,utilities etc.
Any help would be greatly appreciated as we dont have a lot of money to spend on a financial advisor.

elliebean_2

serendipitity wrote:

My mother is 62 and is going to insure herself for £50.000 so that in the event of her death the rest of the mortgage would be paid off. The house is worth £270.000. Would the £50.000 life insurane be exempt from inheretance tax if put in a trust?

Presumably if your mum is taking out a life policy for £50k then that is what is outstanding on her mortgage? So, on her death her estate would still be worth £270k (house) plus any other assets she has?

dragonfly02

Although I have already posted in this section of the forum I believe my message is more appropriate for this thread than any other part of the whole forum.

HELP US END THIS UNFAIR TAX...NOW
Click this link to sign a petition to abolish inheritance tax
http://www.express.co.uk/inheritancetax.html

The Daily Express believes inheritance tax is an immoral form of taxation that penalises hard work and thrift. By raising a 40% levy on earned assets, it is also effectively double taxation. It frequently piles financial misery and distress on families already suffering the pain of bereavement; that is nothing less than grave robbery.

Over the last decade, millions of households have been drawn into the death duty trap by steadily rising property prices. Often, people are forced to sell their family homes to pay the duty.

The burden of death duty largely falls not on the super rich, who can often afford to use tax avoidance schemes, but on millions of hard-pressed families struggling on modest incomes.

For all the anguish it causes, inheritance tax raises a tiny proportion of the Government's revenue, less than one per cent. We believe that inheritance tax is inherently unfair and are therefore demanding the Government abolishes it outright in the Chancellor's forthcoming Budget.

budbow7210

My mother-in-law is now a widow.
I was wondering if she willed her home in my name and my husband's would we still be liable for tax on her death?
Is it possible could she transfer the deeds to both my husband and myself while she is alive, would we still be liable for tax on her death?

RayWolfe

1. Yes if that and her other assets were over the IHT threshold.
2. Yes unless you threw her out of the property.

MKUX3

my mother is now a widow

she was wondering what best to do from now on

me and my sister are left in family

her house isworth about 160K
(no mortgage)

savings approx 150 K

should she gift some of the savings to us or change wording in will (over a year since dad died????)