Inheritance tax - question on nil rate band transfers and gifts

tfridays16

To give example:
A husband's wife passes away in 2015, without leaving a will. Her estate is less than the £325 threshold so no inheritance tax due. Also, even though she left no will, under the intestacy rules everything automatically goes to her husband - so would that still come under spouse exemption?
In practice, does that mean none of her threshold was used and so the full £325 allowance can be carried forward to her husband?

The residence nil rate band - from what I have read, that can be transferred from one spouse to another as well if unused, even if the first husband/wife passed away pre 2017 and even if they did not have any property in their estate - is that correct? As long as the property in inherited by children - again this does not have to be specified in a will, but under the intestacy rules?

Finally, in terms of gifts - if the husband as in above example, sole inheritor of his wife's estate, as administrator transferred any investments/shares from his wife's estate straight to one of their children (so an investment for example went straight from being in his wife's name to being in their son's name) - upon the husband's death, will this transfer have to be treated as a gift from him and therefore listed under his assets for inheritance tax purposes? (if his death is within 7 years of any transfer being made).

Thanks for any help.

naedanger

tfridays16 said:

To give example:
A husband's wife passes away in 2015, without leaving a will. Her estate is less than the £325 threshold so no inheritance tax due. Also, even though she left no will, under the intestacy rules everything automatically goes to her husband - so would that still come under spouse exemption?
In practice, does that mean none of her threshold was used and so the full £325 allowance can be carried forward to her husband?

The residence nil rate band - from what I have read, that can be transferred from one spouse to another as well if unused, even if the first husband/wife passed away pre 2017 and even if they did not have any property in their estate - is that correct? As long as the property in inherited by children - again this does not have to be specified in a will, but under the intestacy rules?

Finally, in terms of gifts - if the husband as in above example, sole inheritor of his wife's estate, as administrator transferred any investments/shares from his wife's estate straight to one of their children (so an investment for example went straight from being in his wife's name to being in their son's name) - upon the husband's death, will this transfer have to be treated as a gift from him and therefore listed under his assets for inheritance tax purposes? (if his death is within 7 years of any transfer being made).

Thanks for any help.

All your answers correct. (I am not certain of the intestacy rules, but you have not asked that be checked. If the estate was worth more than £270k in England and there were children or grandchildren then I believe not everything would go to the spouse.)

Yes even though there was no will so long as everything has gone to the spouse the full £325k can be carried forward. (Though the value of this could change in future.)

When the surviving spouse dies the full RNRB from the predeceased spouse can be transferred/claimed if the property is left on the death of the surviving spouse to the descendents (under will or intestacy rules).

Yes any assets that were passed by the sole inheritor direct to children after the death of the first spouse will be classed as gifts from the sole inheritor. (If a deed of variation was done they would not be classed as gifts but then they would use up a fraction of the nil rate band so less of that would transfer.)

Keep_pedalling

It makes no difference to the transferable NRB whether there was a will or not. If your mother had more than £250k of sole assets at the time of her death then it is no so straight forward as everything would not have past to you father.

tfridays16

naedanger said:

tfridays16 said:

To give example:
A husband's wife passes away in 2015, without leaving a will. Her estate is less than the £325 threshold so no inheritance tax due. Also, even though she left no will, under the intestacy rules everything automatically goes to her husband - so would that still come under spouse exemption?
In practice, does that mean none of her threshold was used and so the full £325 allowance can be carried forward to her husband?

The residence nil rate band - from what I have read, that can be transferred from one spouse to another as well if unused, even if the first husband/wife passed away pre 2017 and even if they did not have any property in their estate - is that correct? As long as the property in inherited by children - again this does not have to be specified in a will, but under the intestacy rules?

Finally, in terms of gifts - if the husband as in above example, sole inheritor of his wife's estate, as administrator transferred any investments/shares from his wife's estate straight to one of their children (so an investment for example went straight from being in his wife's name to being in their son's name) - upon the husband's death, will this transfer have to be treated as a gift from him and therefore listed under his assets for inheritance tax purposes? (if his death is within 7 years of any transfer being made).

Thanks for any help.

All your answers correct. (I am not certain of the intestacy rules, but you have not asked that be checked. If the estate was worth more than £270k in England and there were children or grandchildren then I believe not everything would go to the spouse.)

Yes even though there was no will so long as everything has gone to the spouse the full £325k can be carried forward. (Though the value of this could change in future.)

When the surviving spouse dies the full RNRB from the predeceased spouse can be transferred/claimed if the property is left on the death of the surviving spouse to the descendents (under will or intestacy rules).

Yes any assets that were passed by the sole inheritor direct to children after the death of the first spouse will be classed as gifts from the sole inheritor. (If a deed of variation was done they would not be classed as gifts but then they would use up a fraction of the nil rate band so less of that would transfer.)

Thanks a lot. Going on basis of the estate being less that £270 yes, so everything would go to remaining spouse. 
Glad I've understood things correctly. 

Keep_pedalling

tfridays16 said:

naedanger said:

tfridays16 said:

To give example:
A husband's wife passes away in 2015, without leaving a will. Her estate is less than the £325 threshold so no inheritance tax due. Also, even though she left no will, under the intestacy rules everything automatically goes to her husband - so would that still come under spouse exemption?
In practice, does that mean none of her threshold was used and so the full £325 allowance can be carried forward to her husband?

The residence nil rate band - from what I have read, that can be transferred from one spouse to another as well if unused, even if the first husband/wife passed away pre 2017 and even if they did not have any property in their estate - is that correct? As long as the property in inherited by children - again this does not have to be specified in a will, but under the intestacy rules?

Finally, in terms of gifts - if the husband as in above example, sole inheritor of his wife's estate, as administrator transferred any investments/shares from his wife's estate straight to one of their children (so an investment for example went straight from being in his wife's name to being in their son's name) - upon the husband's death, will this transfer have to be treated as a gift from him and therefore listed under his assets for inheritance tax purposes? (if his death is within 7 years of any transfer being made).

Thanks for any help.

All your answers correct. (I am not certain of the intestacy rules, but you have not asked that be checked. If the estate was worth more than £270k in England and there were children or grandchildren then I believe not everything would go to the spouse.)

Yes even though there was no will so long as everything has gone to the spouse the full £325k can be carried forward. (Though the value of this could change in future.)

When the surviving spouse dies the full RNRB from the predeceased spouse can be transferred/claimed if the property is left on the death of the surviving spouse to the descendents (under will or intestacy rules).

Yes any assets that were passed by the sole inheritor direct to children after the death of the first spouse will be classed as gifts from the sole inheritor. (If a deed of variation was done they would not be classed as gifts but then they would use up a fraction of the nil rate band so less of that would transfer.)

Thanks a lot. Going on basis of the estate being less that £270 yes, so everything would go to remaining spouse. 
Glad I've understood things correctly. 

It was £250k in 2015

tfridays16

Keep_pedalling said:

It makes no difference to the transferable NRB whether there was a will or not. If your mother had more than £250k of sole assets at the time of her death then it is no so straight forward as everything would not have past to you father.

Thanks, just wanted to confirm. Yes, was going on basis of the estate being less than £270. 

naedanger

tfridays16 said:

naedanger said:

tfridays16 said:

To give example:
A husband's wife passes away in 2015, without leaving a will. Her estate is less than the £325 threshold so no inheritance tax due. Also, even though she left no will, under the intestacy rules everything automatically goes to her husband - so would that still come under spouse exemption?
In practice, does that mean none of her threshold was used and so the full £325 allowance can be carried forward to her husband?

The residence nil rate band - from what I have read, that can be transferred from one spouse to another as well if unused, even if the first husband/wife passed away pre 2017 and even if they did not have any property in their estate - is that correct? As long as the property in inherited by children - again this does not have to be specified in a will, but under the intestacy rules?

Finally, in terms of gifts - if the husband as in above example, sole inheritor of his wife's estate, as administrator transferred any investments/shares from his wife's estate straight to one of their children (so an investment for example went straight from being in his wife's name to being in their son's name) - upon the husband's death, will this transfer have to be treated as a gift from him and therefore listed under his assets for inheritance tax purposes? (if his death is within 7 years of any transfer being made).

Thanks for any help.

All your answers correct. (I am not certain of the intestacy rules, but you have not asked that be checked. If the estate was worth more than £270k in England and there were children or grandchildren then I believe not everything would go to the spouse.)

Yes even though there was no will so long as everything has gone to the spouse the full £325k can be carried forward. (Though the value of this could change in future.)

When the surviving spouse dies the full RNRB from the predeceased spouse can be transferred/claimed if the property is left on the death of the surviving spouse to the descendents (under will or intestacy rules).

Yes any assets that were passed by the sole inheritor direct to children after the death of the first spouse will be classed as gifts from the sole inheritor. (If a deed of variation was done they would not be classed as gifts but then they would use up a fraction of the nil rate band so less of that would transfer.)

Thanks a lot. Going on basis of the estate being less that £270 yes, so everything would go to remaining spouse. 
Glad I've understood things correctly. 

Actually as Keep-pedalling has pointed out the death was in 2015 so the limit then was £250k (plus personal possessions if the rule on that point was the same in 2015 as it is now). 

Current rules for England and Wales:
https://www.gov.uk/inherits-someone-dies-without-will/y/england-and-wales/yes/yes/yes

Edit: Also some assets may have passed directly  to the spouse rather than through the estate - so joint bank accounts and property owned as joint tenants.

tfridays16

naedanger said:

tfridays16 said:

naedanger said:

tfridays16 said:

To give example:
A husband's wife passes away in 2015, without leaving a will. Her estate is less than the £325 threshold so no inheritance tax due. Also, even though she left no will, under the intestacy rules everything automatically goes to her husband - so would that still come under spouse exemption?
In practice, does that mean none of her threshold was used and so the full £325 allowance can be carried forward to her husband?

The residence nil rate band - from what I have read, that can be transferred from one spouse to another as well if unused, even if the first husband/wife passed away pre 2017 and even if they did not have any property in their estate - is that correct? As long as the property in inherited by children - again this does not have to be specified in a will, but under the intestacy rules?

Finally, in terms of gifts - if the husband as in above example, sole inheritor of his wife's estate, as administrator transferred any investments/shares from his wife's estate straight to one of their children (so an investment for example went straight from being in his wife's name to being in their son's name) - upon the husband's death, will this transfer have to be treated as a gift from him and therefore listed under his assets for inheritance tax purposes? (if his death is within 7 years of any transfer being made).

Thanks for any help.

All your answers correct. (I am not certain of the intestacy rules, but you have not asked that be checked. If the estate was worth more than £270k in England and there were children or grandchildren then I believe not everything would go to the spouse.)

Yes even though there was no will so long as everything has gone to the spouse the full £325k can be carried forward. (Though the value of this could change in future.)

When the surviving spouse dies the full RNRB from the predeceased spouse can be transferred/claimed if the property is left on the death of the surviving spouse to the descendents (under will or intestacy rules).

Yes any assets that were passed by the sole inheritor direct to children after the death of the first spouse will be classed as gifts from the sole inheritor. (If a deed of variation was done they would not be classed as gifts but then they would use up a fraction of the nil rate band so less of that would transfer.)

Thanks a lot. Going on basis of the estate being less that £270 yes, so everything would go to remaining spouse. 
Glad I've understood things correctly. 

Actually as Keep-pedalling has pointed out the death was in 2015 so the limit then was £250k (plus personal possessions if the rule on that point was the same in 2015 as it is now). 

Current rules for England and Wales:
https://www.gov.uk/inherits-someone-dies-without-will/y/england-and-wales/yes/yes/yes

Edit: Also some assets may have passed directly  to the spouse rather than through the estate - so joint bank accounts and property owned as joint tenants.

Missed typed 5 instead of 7 - but basically was working on a figure well below £100 to be honest. No joined bank accounts or property to worry about. 

tfridays16

tfridays16 said:

Keep_pedalling said:

It makes no difference to the transferable NRB whether there was a will or not. If your mother had more than £250k of sole assets at the time of her death then it is no so straight forward as everything would not have past to you father.

Thanks, just wanted to confirm. Yes, was going on basis of the estate being less than £270. 

Missed typed 5 instead of 7 - but basically was working on a figure well below £100 to be honest, no need to take anyone else into account. 

Savvy_Sue

naedanger said

Edit: Also some assets may have passed directly  to the spouse rather than through the estate - so joint bank accounts and property owned as joint tenants.

They may pass direct, but surely their value still contributes to the value of the estate? ie normally half the value of the house and half the value of the of the joint bank accounts, unless their value has been assigned in different %?

naedanger

Savvy_Sue said:

naedanger said

Edit: Also some assets may have passed directly  to the spouse rather than through the estate - so joint bank accounts and property owned as joint tenants.

They may pass direct, but surely their value still contributes to the value of the estate? ie normally half the value of the house and half the value of the of the joint bank accounts, unless their value has been assigned in different %?

Assets passing via survivorship of joint accounts or via joint tenants do contribute to what is subject to IHT. But I don't think they will contribute to the assets that pass via intestacy rules.

Suppose you owned a house worth £5m owned on a joint tenant basis with your spouse. Do you think on death your children could claim any of it just because your spouse didn't leave a will. (And had they left a will they still couldn't leave any of the house to their children.)