Please help/advise

Tabby026

I am not sure where to post this. My husband and I have assets of around £420,000. If one of us dies (we are in our late 60's), and passes all assets to the survivor, is the survivors inheritance tax allowance £325,000 or £650,000?

Our daughter, who is in her 40's is physically disabled could we put some money into a trust for her, if so how would we go about it?

Any advice would be really helpful.

Whirlybird65

Together you have an allowance of £650k, when one of you passes then the the £325k from that one person is tax free. But, when the second person passes there is only a £325 allowance.

You daughter could have money in a trust. Depending where she lives and what benefits she gets, she may only be allowed a certain amount before benefits are cut.
An issue I am trying to sort out for my sister at the moment !

I think proper advice is needed. The above is my interpretation so far.

ChesterDog

That sounds wrong to me.

If the first to die leaves the entirety of their assets (ignoring tax-free gifts for small amounts) to the surviving spouse, then the IHT allowance is not used and at the death of the second spouse, the allowance in total is £650k, with the taxable remainder of the estate being subject to IHT at 40%, if I remember correctly.

This is my understanding - not guaranteed to be correct.

Stompa

http://www.hmrc.gov.uk/inheritancetax/intro/basics.htm

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 2013-14. 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.

eskbanker

Whirlybird65 wrote: »

Together you have an allowance of £650k, when one of you passes then the the £325k from that one person is tax free. But, when the second person passes there is only a £325 allowance.

Only £649,675 out!

xylophone

http://www.mylastsong.com/advice/383/155/149/how-do-i/plan-my-finances/setting-up-a-trust-for-a-disabled-loved-one

http://www.hmrc.gov.uk/trusts/types/vulnerable.htm

The above might be worth a look.

If setting up any kind of trust, take advice from an expert in wills and trusts who (if necessary) understands the means tested benefits system.