Inheritance tax question

xylophone

http://www.hmrc.gov.uk/inheritancetax/index.htm
http://www.hmrc.gov.uk/inheritancetax/intro/basics.htm
"Increased threshold for married couples and civil partners
Since October 2007, married couples and registered civil partners can effectively increase the threshold on their estate when the second partner dies - to as much as £650,000 in 2012-13. Their executors or personal representatives must transfer the first spouse or civil partner's unused Inheritance Tax threshold or 'nil rate band' to the second spouse or civil partner when they die.
Find out more about transferring an unused Inheritance Tax threshold"

John_Pierpoint

There might be some complications behind the step-father relationship as the simple rules are based on a couple being two people. [Perhaps step-dad had given sums of money to mother, children, wife of a former marriage, ....... during the last 7 years of his life? ]

But on the assumption that all the paperwork has been done correctly and nobody is the widow/widower of anyone else, and we are looking at a simple couple then "father" has left "mother " 100% of his estate and 100% of a nil rate band for IHT . So "mother" will leave 200% of a nil rate band to be set against all the assets she owns or in which she has a named life-time interest.

On the facts given her estate should have enough "headroom" in the (currently £650,000) value of two nil rate bands, to pay no IHT.

http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm43000.htm

Is the value of her estate calculated after legal costs, funeral etc have been accounted for?

Funeral, wake and memorial costs are post death costs allowable against IHT, all other costs (lawyer, accountant, estate agent, etc.) are not.

lilab_2

Thank you xylophone and John_Pierpoint for your responses.

My mum and step-dad have bee married for 37 years and both my dad and my step-dad's former spouse are no longer living. My step-dad had no children of his own, so me and my siblings are the only heirs.

John_Pierpoint

........unless mum has left everything to the cats home.;)

lilab_2

lol John, quite possible!

getmore4less

you get complications if adoptions have happened and if anyone was married at the time a spouse dies and remarries.

it is possible to transfer more than one nillrate band(but not exceed 200%) but the excess does not transfer to another spouse.

libab
But you said your stepdad died and gave it all to your mum, so you never were a benifitiary of your step dad.

AIUI if he had not adopted you would not be hiers under intestate rules.