IHT, will my Nieces need to pay it?

DeeSpare

Good day

I now have an estate (if i dont buy anything else) made up of the following
House I live in on joint tenancy basis of £500k
Savings of £600k

I want to make a will leaving my spouse the house (although i think i wont need to as its joint tenants, and 500k from my savings.
i would like to leave two nieces £50k each

I understand the money left to my spouse should be iht free.

I understand there is an exemption of £325k
But does that 325 exemption start count AFTER i have given my spouse the money, or is that 500k included and therefore my nieces will have to pay the iht?

Thankyou very much

Keep_pedalling

No, nothing you leave you spouse counts towards the NRB. If your nieces are adults you might like to consider gifting rather than leaving in your will,

This would have the advantage of you being able to see it put to use for something like a house deposit, it would also fall out of your estate if you survive 7 years after the gifts.

lincroft1710

Your nieces would not pay IHT, your executors would pay it from your estate.


Whatever you do have your will drawn up by a competent solicitor, not a firm of will writers.

Marcon

DeeSpare said:

Good day

I now have an estate (if i dont buy anything else) made up of the following
House I live in on joint tenancy basis of £500k
Savings of £600k

I want to make a will leaving my spouse the house (although i think i wont need to as its joint tenants, and 500k from my savings.
i would like to leave two nieces £50k each

I understand the money left to my spouse should be iht free.

I understand there is an exemption of £325k
But does that 325 exemption start count AFTER i have given my spouse the money, or is that 500k included and therefore my nieces will have to pay the iht?

Thankyou very much

Everything you leave to your spouse is tax free.

The £100K you leave to your two nieces will mean (at current rates) you have not used £225,000 of your £325,000  IHT allowance. If you die before your spouse, they can inherit the unused portion, thus increasing the amount they can leave without IHT being payable. 

More info: https://www.gov.uk/inheritance-tax

getmore4less

You are into IHT planning.

Max nil rate for a couple is £1m

Is that £600k is just yours or joint.

If just yours what does the spouse have?


Non exempt gifts use up nil rate band.

DeeSpare

Thankyou everyone. Am really very much obliged . 

So nothing to pay and 225 allowance left over if i die first , to be transferred to my spouse.

 When lincroft says the executors would ‘pay it from the estate as below, ‘am assuming that is theoretical if i had left them over the 325 value. I hope i have this right.




lincroft1710 said:

Your nieces would not pay IHT, your executors would pay it from your estate

Whatever you do have your will drawn up by a competent solicitor, not a firm of will writers.

Marcon

DeeSpare said:

Thankyou everyone. Am really very much obliged . 

So nothing to pay and 225 allowance left over if i die first , to be transferred to my spouse.

 When lincroft says the executors would ‘pay it from the estate as below, ‘am assuming that is theoretical if i had left them over the 325 value. I hope i have this right.




lincroft1710 said:

Your nieces would not pay IHT, your executors would pay it from your estate

Whatever you do have your will drawn up by a competent solicitor, not a firm of will writers.

Your nieces would not pay IHT, your executors would pay it from your estate if any IHT needed to be paid. 

In the scenario you have outlined, no IHT would be payable in respect of your estate, and your spouse would indeed get an 'extra' £225K IHT allowance.

Brie

It's been stated on other posts that one should state amounts in a will but give percentages instead.  Obviously you want to be generous to your nieces (I hope they appreciate how nice this is of you!!) but what happens if you need the some of the cash?  If you need to start paying for care then this might reduce significantly so to best guarantee that get a bit you might be better off saying 80% to him and 10% each to the nieces.  

Or as someone has suggested give it to them sooner so you can see them enjoy it.

p00hsticks

Brie said:

It's been stated on other posts that one should state amounts in a will but give percentages instead. 

Also don't mention specific properties as you may have moved or sold them (if you end up having to go into care, for example) and the bequest would then fail. It's bst to leave specific items (or amounts/percentages of cash) to named individuals and then 'everything else' to named residual beneficiaries (divided among them if necessary). The solicitor drawing up the will will work through the possibilites with you.

Marcon

Brie said:

It's been stated on other posts that one should state amounts in a will but give percentages instead.  Obviously you want to be generous to your nieces (I hope they appreciate how nice this is of you!!) but what happens if you need the some of the cash?  If you need to start paying for care then this might reduce significantly so to best guarantee that get a bit you might be better off saying 80% to him and 10% each to the nieces.  

Or as someone has suggested give it to them sooner so you can see them enjoy it.

What other posts 'state' may or may not be what OP wants to achieve. There's no right or wrong way to do it - just be clear on your objectives.

DeeSpare

Thankyou all very much for this clear and helpful advice. It means a lot to me that there are people in the world who are willing to spend their time and effort to help others...even those they dont know.