IHT - is there ever a situation where the allowance doesn't pass to surviving spouse?

Twentytwothousand

Hi there, 

I'm supporting my SiL with probate etc (she is executor).   The value of assets is probably about £375k and no higher than £450k.  My FiL died in 2013 and my MiL in 2021.   I'm presuming we add his allowance to hers and that equals £650k.   Then she was living in the house when she died and is that another £175K?  so the threshold would be £825k?   Or do we also add that he was too (another £175k takes it to £1m) Affects which form we send for probate and whether we have to wait 20 working days before applying as well as if there is any IHT owing. There are two main beneficiaries and then a number of small bequests.  I believe there is no IHT owing but want to fill out the right forms/support SiL to give right info on probate process.   Agreeing to be executor was undertaken almost 20 years ago and I think she is viewing it as a bit daunting (with good reason)

Many thanks

Keep_pedalling

As the estate is no higher than £450k then the simplest thing to do is for your SIL to use her mother’s NRB and the transferable NRB from her father (assuming his estate passed to her). She will not need the either residential NRB so will be able to apply for probate using IHT205 rather than IHT400 which makes things simpler.

Filling in IHT 205 and PA1 is fairly straight forward with a simple estate, and if she gets stuck there is always plenty of help here.

Marcon

This link might be useful: https://www.gov.uk/government/collections/probate-forms

getmore4less

 is there ever a situation where the allowance doesn't pass to surviving spouse?

When some of it is used by bequests to non spouse or gifts in the previous 7 years.

That can reduce the transferable nil rate band

theoretica

 is there ever a situation where the allowance doesn't pass to surviving spouse?

It also gets complicated if someone survives more than one spouse - you can't get more than double the single allowance.

SeniorSam

 is there ever a situation where the allowance doesn't pass to surviving spouse?

The allowance, or an amount up to that amount, could pass into a Trust to be managed by Trustees, usually the family members, and invested appropriately. Care should be taken on the investing, as if income is generated, than tax will be payable, but there are other investments that do not generate income but can still grow. These arrangements can be useful as growth will be outside the remaining estate and the Trust can be used at the discretion of the Trustees to make loans to the surviving spouse, as an example.

Even then, there are more ways that this arrangement can be managed effectively.