Inheritance tax from two people?

[Deleted User]

I'm asking this on behalf of my partner. 

I know really we should be seeking legal advice, but at the moment my partner is under so much pressure that I don't want him to stress himself with this problem also.

Some background information: 

Unfortunately, about 3 months ago his mum was diagnosed with terminal lung cancer.
My partners dad keeps worrying about IHT and has asked my partner to contact lawyers etc. But I just want my partner to focus on time he has with his mum. So thought it was worth asking on here. 

His dad & mum split up 10 years ago but she still owns half of their home in Ireland (his dad continues to live in it, and she just pays maintenance towards it. No mortgage and it is worth 90k (Euros). 
She also owns a 1 bed flat in Brighton, which we estimate to be worth about £250k, that my partner currently lives in. 
She is leaving the 1 bed flat to both her sons, equally split 50/50. 

Their worry is that worst case scenario, what if their grandad passes at the same time as their mum, because he is 86. 
If he was to pass away around the same time as their mother, would they have to pay IHT on what their mum leaves them and their grandad as a whole? Or do you pay IHT per person? 

As the grandad owns a 3 bedroom flat in Brighton, which we estimate to be worth about £350k. 
The grandads will states my partner and his brother will inherit 50/50 of that flat also. 

They don't really have any other wealth, other than the flats so not much else is being left.

Is IHT based on what you are left from one person at a time? 

Sorry for the ramble, I know it seems very insensitive to be talking about money worries etc before anyone has passed, but I think this has just become a focus so that they don't have to think about other more emotional things. If that makes sense. 

Thanks in advance. 

[Deleted User]

It's based on the estate. So IHT will be paid on his mother's estate if applicable and likewise with his granddad.

The estates will have no bearing on each other.

getmore4less

Start with are they still married?

RAS

I doubt many folk will be up on inheritance issues in Eire. But if this was England it would be relevant as to whether the parents own the house there as joint tenants or tenants in common. So you need to research there for the rules, as it is possible that dad inherits the house. Is there any mention of it in mum's will?

Mum and grand-dad have Residence Nil Band Rates of £500k each as they would be leaving property to their children or grandchildren. The fact that their beneficiaries are getting property from two family members is not relevant.

naedanger

Deleted_User said:

I'm asking this on behalf of my partner. 

I know really we should be seeking legal advice, but at the moment my partner is under so much pressure that I don't want him to stress himself with this problem also.

Some background information: 

Unfortunately, about 3 months ago his mum was diagnosed with terminal lung cancer.
My partners dad keeps worrying about IHT and has asked my partner to contact lawyers etc. But I just want my partner to focus on time he has with his mum. So thought it was worth asking on here. 

His dad & mum split up 10 years ago but she still owns half of their home in Ireland (his dad continues to live in it, and she just pays maintenance towards it. No mortgage and it is worth 90k (Euros). 
She also owns a 1 bed flat in Brighton, which we estimate to be worth about £250k, that my partner currently lives in. 
She is leaving the 1 bed flat to both her sons, equally split 50/50. 

Their worry is that worst case scenario, what if their grandad passes at the same time as their mum, because he is 86. 
If he was to pass away around the same time as their mother, would they have to pay IHT on what their mum leaves them and their grandad as a whole? Or do you pay IHT per person? 

As the grandad owns a 3 bedroom flat in Brighton, which we estimate to be worth about £350k. 
The grandads will states my partner and his brother will inherit 50/50 of that flat also. 

They don't really have any other wealth, other than the flats so not much else is being left.

Is IHT based on what you are left from one person at a time? 

Sorry for the ramble, I know it seems very insensitive to be talking about money worries etc before anyone has passed, but I think this has just become a focus so that they don't have to think about other more emotional things. If that makes sense. 

Thanks in advance. 

This post only considers UK inheritance tax (IHT).

IHT depend on the value of the person who has died's estate. A person does not pay IHT on the amount of inheritance they have received in a year. (So receiving two inheritances in one tax year has the same IHT consequences as receiving them in different tax years.)

Every estate gets an IHT allowance (or nil rate band) of at least £325k or up to £500k if they are leaving a property they lived in during their lifetime to their children or grandchildren. (There other possible IHT allowances but I don't think they need be considered in the situation you are currently considering.)

So it sounds like your partner's mother's father's estate definitely won't pay IHT unless he has significantly more assets than the house he is leaving his grandsons.

Did your partner's mother ever live in the house she is leaving her sons? If so then again the IHT nil rate band for her estate will also be £500k. If she never lived in that house then further questions arise to determine whether IHT will arise.

Marcon

Deleted_User said:

I'm asking this on behalf of my partner. 

I know really we should be seeking legal advice, but at the moment my partner is under so much pressure that I don't want him to stress himself with this problem also.

But if you get some proper legal advice from someone familiar with Eire legislation, he won't need to stress himself with what may well be a non-problem. 

In practical terms, though, there's nothing anyone can do at this late stage of things, so whatever the answer is, it won't have any impact on whether/how IHT is payable.

RAS

getmore4less said:

Start with are they still married?

If not, it may be possible to arrange a judicial separation? Not sure if the time is available but might help.

Keep_pedalling

RAS said:

getmore4less said:

Start with are they still married?

If not, it may be possible to arrange a judicial separation? Not sure if the time is available but might help.

Why would they need that if they were divorced?

Keep_pedalling

If the mother and GF are both resident in the U.K. there should be no IT to pay on either English estate regardless of when they actually die, based on the value of the properties involved. Their estate would need to exceed £500k each for IHT to have any effect on their inheritance.

[Deleted User]

Thank you everyone for your responses, his mum & dad are still legally married. 
The house is being sold at the moment, so not sure on the implications of that.
But definitely, I'll tell my partner what you have all advised and then he can speak to a specialist when he has a little more time on his hands.
Like you said, not much can be done at this stage anyway, but at least we know a little more than we did before.

Thank you.