IHT, Tenants in Common and Lifetime Interest

getmore4less

Where the RNRB is not used on the first death it can pass to the second person for use on their qualifying property

in this case that is 1/2 the house so at least £250k, would need to check if the property in the IPDI trust also qualifies as it will be included for IHT.

If on the first death it can't be used, that makes it unused and transferable.

it is transferable even if the first to die had no assets or a house.

this in the IHT manual is relevant.
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm46011

have a good read of the rest
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm46000

SeniorSam

The beneficiary has not received the half of the property following the death. It has transferred to a Trust which holds it until the wife has died. Therefore the housing benefit is lost.

Had it gone to the family member directly following death, by way of selling the property, then that is different. It needs to go to the spouse to retain the housing benefit.

Seek the advice of a STEP solicitor.
Sam

getmore4less

It is not lost it is unused so becomes transferable.

What happens to the share of the house is not relevant.
It transfers even if there was no house.

SevenOfNine

getmore4less wrote: »

It is not lost it is unused so becomes transferable.

What happens to the share of the house is not relevant.
It transfers even if there was no house.

I believe Senior Sam is referring to the information in this link. Certainly looks relevant as OP said it went into a trust, NOT to a direct descendent.

https://www.gov.uk/government/publications/inheritance-tax-main-residence-nil-rate-band-and-the-existing-nil-rate-band/inheritance-tax-main-residence-nil-rate-band-and-the-existing-nil-rate-band

getmore4less

SevenOfNine wrote: »

I believe Senior Sam is referring to the information in this link. Certainly looks relevant as OP said it went into a trust, NOT to a direct descendent.

https://www.gov.uk/government/publications/inheritance-tax-main-residence-nil-rate-band-and-the-existing-nil-rate-band/inheritance-tax-main-residence-nil-rate-band-and-the-existing-nil-rate-band

No where does that say it is lost, just unusable.

SevenOfNine

getmore4less wrote: »

No where does that say it is lost, just unusable.

........and nowhere does it say "what happens to the share of the house is not relevant" because it IS!

getmore4less

It works the same as the regular nil rate band if you don't/can't use it it becomes transferable, not lost.

The HMRC manual says the life tenant can use the share in trust as part of their qualifying interest as it happens to be the same property they also own they can combine.

Once transferred it is the spouses qualifying interest that uses both RNRB.

getmore4less

SevenOfNine wrote: »

........and nowhere does it say "what happens to the share of the house is not relevant" because it IS!

Only to the extent of if the deceased can use their RNRB

If the property goes to spouse that is exempt so can't be use.
If it goes to a qualifying descendent it can be use
If it goes to trust in most cases it can't be used

if they can't use it then it becomes transferable you then look at the spouse can use it against their qualifying interests at the time.

SeniorSam

Thank you SevenofNine,
If you read the Government statements on this ..... https://www.gov.uk/government/publications/inheritance-tax-main-residence-nil-rate-band-and-the-existing-nil-rate-band/inheritance-tax-main-residence-nil-rate-band-and-the-existing-nil-rate-band ........and the examples given, it show that what I have been saying is correct.

If the OP wants to save inheritance tax, the Will needs to be changed. No more comment on this is necessary.
Sam

Yorkshireman99

SeniorSam wrote: »

Thank you SevenofNine,
If you read the Government statements on this ..... https://www.gov.uk/government/publications/inheritance-tax-main-residence-nil-rate-band-and-the-existing-nil-rate-band/inheritance-tax-main-residence-nil-rate-band-and-the-existing-nil-rate-band ........and the examples given, it show that what I have been saying is correct.

If the OP wants to save inheritance tax, the Will needs to be changed. No more comment on this is necessary.
Sam

That is why the OP MUST get professional advice.