Inheritance tax question

George65456

I've tried searching for this online, but with no luck. My wife and I own our house as tenants in common. I own four fifths, she owns one fifth. The house is worth about £385,000. I have savings and other assets of about £220,000. We have no mortgage or other debts. We have no joint accounts. I would like to make a will leaving my share of the house to my wife, and my savings and assets to my sister. Would my estate be liable for inheritance tax and what is the calculation to show this? Many thanks.

agrinnall

The house is outside the scope of IHT if left to your wife (I'm not even sure if it needs to be mentioned in the will as you are tenants in common), and your other assets appear to be below the IHT threshold so nothing to pay.


I presume you have discussed this with your wife and that she is happy to effectively receive nothing in the will?

Mojisola

George65456 wrote: »

I have savings and other assets of about £220,000. We have no mortgage or other debts.

I would like to make a will leaving my share of the house to my wife, and my savings and assets to my sister.

Unless your wife has plenty of savings in her own name, she could challenge a will that left your assets to your sister.

Mojisola

George65456 wrote: »

My wife and I own our house as tenants in common.

I own four fifths, she owns one fifth.

I would like to make a will leaving my share of the house to my wife

If you both plan on leaving your share of the house to each other, why not change the ownership to 'joint tenants' now?

Keep_pedalling

Mojisola wrote: »

If you both plan on leaving your share of the house to each other, why not change the ownership to 'joint tenants' now?

That would make sense unless the OPs wife has someone else she wants to leave her share to if she dies first, a child from a previous marriage for instance.

kidmugsy

agrinnall wrote: »

The house ... I'm not even sure if it needs to be mentioned in the will as you are tenants in common

Oh yes it does. There would be no need to mention it if it were held as joint tenants.

agrinnall wrote: »

I presume you have discussed this with your wife and that she is happy to effectively receive nothing in the will?

A strong point, that.

Tom99

[FONT=Verdana, sans-serif]If you leave £220k to your sister, your wife will only inherit £105k of your nil rate band rather then £325k.[/FONT]
[FONT=Verdana, sans-serif]If you trust your wife leave it all to her and allow her to gift £220k to your sister.[/FONT]

George65456

The situation is complicated, the main complication being that my wife is terminally ill and unlikely to survive me. Thanks for all your suggestions but I would appreciate a straightforward answer to my question.

Keep_pedalling

George65456 wrote: »

The situation is complicated, the main complication being that my wife is terminally ill and unlikely to survive me. Thanks for all your suggestions but I would appreciate a straightforward answer to my question.

Sorry to hear that.

What you really need to do is to make an appointment with a solicitor to draft you wills, do not try to DIY this. Once you have told the solicitor what you want to achieve their will go through all the what if situations that could arise and need covering in the will.

Mojisola

George65456 wrote: »

The situation is complicated, the main complication being that my wife is terminally ill and unlikely to survive me. Thanks for all your suggestions but I would appreciate a straightforward answer to my question.

You really do need to take professional advice.

Linton

George65456 wrote: »

I've tried searching for this online, but with no luck. My wife and I own our house as tenants in common. I own four fifths, she owns one fifth. The house is worth about £385,000. I have savings and other assets of about £220,000. We have no mortgage or other debts. We have no joint accounts. I would like to make a will leaving my share of the house to my wife, and my savings and assets to my sister. Would my estate be liable for inheritance tax and what is the calculation to show this? Many thanks.

Your total assets=£220K+0.8X£385K=£528K.
Assets passed to spouse=£308K
£220K is liable for IHT but as it is below the £325K allowance the tax rate is 0%.
£105K of your allowance is unused and will be added to wife's allowance should you die first.