How to setup a Will to reduce IHT for family over threshold?

genny

We are married, currently with one young child. Our estate (mainly due to the rocketed value of our house over many years) will be over the IHT married joint limit of 650K.

What is the best way of setting up our wills to ensure the survivor partner and child aren't hit with a tax bill?

Would it be best to leave a percentage to our child, and the remaining percentage to the other surviving partner, or doesn't that help out at all? (e.g. Say for example our house is valued at 600K and total other worth is around 200K, would be be sensible to leave out child 33% and the suriving partner the remaining 67% so neither percentage is over 650? We have no issue in leaving a large chunk to our child)

Most of our financial assets are in my husbands name only.

We have always written and stored our own Wills, but now this appears to be more complex as the house price has pushed us up.

Bit of advice and pointers would be great.

daska

You need to see a solicitor that specialises in IHT. There are different ways to approach things depending on what you want to achieve. And you don't know for sure what the limit/rules will be when you pass away. It's only relatively recently that a survivor could 'inherit' the unused part of their deceased spouse's allowance.
They are likely to suggest that you don't leave it all in his name though.
e.g. house could be held as:
a. joint tenants so that ownership passes automatically and is not subject to IHT if one spouse dies, or
b. tenants in common so that each of you own a set percentage of the house and that can be placed in a Trust for the benefit of surviving spouse, children and grandchildren.

genny

Thanks daska, will search out an expert, it was all easy until our house seemed to be worth silly money!

Fire_Fox

http://www.willaid.org.uk/
Have you considered gifting some within your lifetime? The earlier you do this the less likely it is to be taken into consideration for inheritance tax or seen by the state as deprivation of assets if you need full time care.

getmore4less

The £650k is made up of 2* £325k nill rate bands and you only get these once per person, so if you use any of one of them on first death then the % unused is used to uplift the nill rate band of the second by the unused %.

For the second to get the full 100% uplift the first must use none of their nill rate band.

The simplest way to reduce the liability is to spend it or give it away.

Remember it is not the value of the house/estate but the value less any debts like mortgages.