Iht/nrb

castle96

circs. age 69, single, sons 1,2,3. estate say £800k incl house £150k. Current will splits everything into 3 for sons.
Would it reduce IHT liability if I left the house to one son, as

"This measure introduces an additional nil-rate band when a residence is passed on death to a direct descendant.
This will be:
£100,000 in 2017 to 2018
£125,000 in 2018 to 2019
£150,000 in 2019 to 2020
£175,000 in 2020 to 2021"

Son has own house and would not live in mine. Would 'ask' him to sell and split 3 ways

p00hsticks

castle96 wrote: »

Son has own house and would not live in mine. Would 'ask' him to sell and split 3 ways

Sounds like a recipe for disaster - why not leave it jointly to all three sons ?

As far as I'm aware it achieves the same objective and - while creating possible problems in requiring all three to agree on what happens to the property - at least ensures that your wishes will definitely be met and are not reliant on son doing what you 'ask' after your death.

Bear in mind that if son is on benefits, in debt, paying child maintentance or going through a messy divorce at the point you die, he may not simply be able to gift money left to him alone without legal or financial repercussions just because you 'asked' him to.

But from the point of view of reducing IHT you may well be better off seeing if you are in a position to pass on any of the other £650k prior to your death .....

castle96

yeah, OK, but WOULD it take the value of the house outside the IHT calculation

Keep_pedalling

You no not have to leave it to a single child the RNRB would still be available If you left it to 20 children.

When you say single are you widowed? If not then the best way of reducing IHT is to a) spend more on yourself b) give away more and live another 7 years. You can also cover any tax arising from an untimely death by taking out term insurance.

Keep_pedalling

castle96 wrote: »

yeah, OK, but WOULD it take the value of the house outside the IHT calculation

Only if the house is worth £175k or less.

castle96

Sorry still not understanding (bear with me pl)

A. Leave will as is. Entire estate includes house value. IHT payable on amount over £325

B. Take house out of it, leave it to 1 son, ( or 3, or 1 and his 1/3 share of rest of will be reduced to compensate) sons, then IHT is reduced - yes ?

Divorced a long time. House worth £150. Where does the £175 come from ?

Just thinking of reducing IHT

getmore4less

As long as the house is left to direct decendants you get the additional nil rate band

Multiple decendants is fine.

If you want to reduce IHT give away stuff now and stop accumulating any more.

castle96

so currently will says "all estate to 3 sons divided by 3"

SHOULD it be altered to "house to 3 equally, rest of estate to 3 equally" (reduces IHT) - yes ?

Tom99

castle96 wrote: »

so currently will says "all estate to 3 sons divided by 3"

SHOULD it be altered to "house to 3 equally, rest of estate to 3 equally" (reduces IHT) - yes ?

No all estate to three son's equally is fine, don't mention the house in your will.
You will have £325k NRB plus £150k RNRB so IHT on £800k incl house would be £130k
Remember you can gift £3k pa IHT free and money in a pension is also free from IHT so you could as a non earner put £2,880 into say a SIPP which will be grossed up to £3,600. If you needed that money you can always cash it in.

castle96

£175000 ?....

Tom99

castle96 wrote: »

£175000 ?....

From April 2020 but limited to value of house so in your case £150,000