Inheritance Tax: Save £100,000s with simple advanced planning Article Discussion

gaz1984

Just looking for some advice, my mum passed in September and we've just found out that her estate is worth £335,000 ie, just over the threshold for IHT.
Her half of the house (estimated £90k) is due to be split between myself and my brother with the rest, approx £245k, due to be split this way, half £122.5k to my dad, then the other half, split between me and my brother £61.5k each.

On this website it looks to say that anything left to my dad, is exempt from the IHT allowance due to being a spouse. But on the goverment website, it seems to suggest that it would only be exempt if my mum left her entire estate to him.

Which is right?

I know its not massively over the IHT threshold but id rather the taxman didnt get any of it, afterall my mum worked her whole life and was taxed on her money and now being taxed again.

getmore4less

gaz1984 wrote: »

Just looking for some advice, my mum passed in September and we've just found out that her estate is worth £335,000 ie, just over the threshold for IHT.
Her half of the house (estimated £90k) is due to be split between myself and my brother with the rest, approx £245k, due to be split this way, half £122.5k to my dad, then the other half, split between me and my brother £61.5k each.

On this website it looks to say that anything left to my dad, is exempt from the IHT allowance due to being a spouse. But on the goverment website, it seems to suggest that it would only be exempt if my mum left her entire estate to him.

Which is right?

I know its not massively over the IHT threshold but id rather the taxman didnt get any of it, afterall my mum worked her whole life and was taxed on her money and now being taxed again.

Spouse exemption apply to any amount passed to spouse., assets passed to others reduce the transferable nil rate band.

seven-day-weekend

My husband and I own a bungalow as 50-50 tenants in common. What tax implications would there be if we each left our share to our son? The bungalow is worth about £150k, we would also have about another £200k between us.

getmore4less

seven-day-weekend wrote: »

My husband and I own a bungalow as 50-50 tenants in common. What tax implications would there be if we each left our share to our son? The bungalow is worth about £150k, we would also have about another £200k between us.

The wills need to be worded correctly to avoid future CGT on the sons share.

SeniorSam

There would be no inheritance tax as you both have allowances of £325,000, so as long as your Wills are worded correctly, as getmore4less has said, you should not have a problem and your son will not have to pay any tax

aps_el

Sorry another variation on the same theme.

I have to execute the will of my father. My mother and father were advised to become tenants in common in 2004 and did so. In their wills they leave all their individual assets (not jointly owned) to their children. This would include some savings and of course their half of the house.

There is nothing in the will about any form of trust etc to give my mother a right to live in the house. However, none of the children wish her to leave or to sell my fathers half of the house.

The question is how do we complete execution of the will leaving my mother in the house? I guess the house needs to be valued and some form of legal document drawn up to formalise the fact that the children own half the value of the house whilst leaving my mother in her home?

Is this the process and what is this type of document called? Is it necessary to get a solicitor to draw this up? I would be grateful of any advice please.

getmore4less

Check but the lack of life interest may result in future CGT liabilities.
A DOV may be needed.

Mojisola

aps_el wrote: »

My mother and father were advised to become tenants in common in 2004 and did so. In their wills they leave all their individual assets (not jointly owned) to their children. This would include some savings and of course their half of the house.

There is nothing in the will about any form of trust etc to give my mother a right to live in the house.

If the will writer is the person who advised them to become TIC, the will is poorly written. Putting half the house in trust until the survivor no longer needs it should have been automatically in the will.

SeniorSam

Actually putting half the house in Trust when the first one dies is not such a good idea. It can complicate matters if there is a house move and may attract capital gains tax on the growth when the second one dies.

Consider allowing the Trustees to accept a Promissory Note for a value up to the nil rate band allowance, or less if the Trustees thing fit. In that way the survivor retains control, does not have to worry about the legalities of changing house and yet still protects the half value, or whatever amout by owing an agreed sum to the Trust on death.

We have incorportated this in our Wills and have also made spreadsheets of all assets and where documents are. We originally stored our Wills, but the company ceased trading and we managed to get them back. Suggested that children deal with Probate but could also seek advice from a solicitor if in difficulty. In the last resort, employ a solicitor but on a fixed fee agreement.

Sam

getmore4less

Life interest gets PPR so no cgt in the trust.