Transferring Inheritance Tax

suesmiff

Hi,

My mum passed away in 1996,sadly she never made a will.
She had nothing to leave,other than the house she owned with my dad, so didn't think it necessary.
My dad simply continued to live in the house,he had the deeds transferred to his name just recently.I don't think he had any probate
done.
My question is will I be able to transfer my mum's unused inheritance
tax allowance when my dad passes away,again the only thing he'll be
leaving is the house he lives in.

Sorry if this is a stupid question but it's bothering my dad.

Thanks in advance.

[Deleted User]

The short answer is 'yes'.

If your mum had indeed nothing to leave his estate would have an IHT exemption of £650000.

Hope that reassures your Dad.

suesmiff

Thanks very much

agrinnall

[Deleted User] wrote:

The short answer is 'yes'.

If your mum had indeed nothing to leave his estate would have an IHT exemption of £650000.

Hope that reassures your Dad.

Is that right? Doesn't the IHT Threshold at the date of the OP's mum's death apply, rather than the current £325K? Which would be either £154K (up to 5 April) or £200K (from 6 April), meaning a total now of either £486K or £525K. I may have it wrong, but I've seen this said in other threads.

https://www.gov.uk/government/publications/rates-and-allowances-inheritance-tax-thresholds/inheritance-tax-thresholds

[Deleted User]

I believe that it is the percentage unused at the time of the first death that is relevant. So, if 40% of the threshold AT THE TIME unused the threshold on second death would be increased by 40%

http://www.which.co.uk/money/tax/guides/inheritance-tax-explained/rules-for-married-couples-and-civil-partners/

Good worked examples here:

http://findlaw.co.uk/law/tax/taxes/inheritance_tax_taxes/9485.html

And the form itself bears this out (box 18)

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/373532/IHT402.pdf

booksurr

agrinnall wrote: »

Is that right? Doesn't the IHT Threshold at the date of the OP's mum's death apply YES , rather than the current £325K that applies on the second death? Which would be either £154K (up to 5 April) or £200K (from 6 April), meaning a total now of either £486K or £525K. I may have it wrong, but I've seen this said in other threads. indeed you have it wrong

https://www.gov.uk/government/publications/rates-and-allowances-inheritance-tax-thresholds/inheritance-tax-thresholds

Mother died intestate, therefore assuming the property was worth whatever was the 1996 limit (currently <£250,000 in 2015) at her death, her estate is passed over completely intact to the spouse (all personal possessions are ignored). If her estate was worth more than that total father gets a life interest in the property plus 50% of the residual over that limit, and the other 50% would be assigned to the children

as you know transfers between spouses do not count for IHT purposes, so mother retains 100% of her allowance provided her estate was below that 1996 threshold

father therefore has 100% of mothers allowance but that % is applied to whatever the IHT nil rate threshold is at the date of the second (ie father's) death

hence £650,000 now available re father's estate

suesmiff

Thanks again everyone,that's very helpful.

Keep_pedalling

Has your dad made a will? If not persuade him to do so, it will make things so much easier for you when the time comes.

getmore4less

The statutory legacy(with issue) in 1996 was £125k

If the house was joint tenants(possible if the trasnfer was done with out a grant) then it would not count in the distributable estate.