Inheritance Tax for people who've remarried 21 December 2022 at 12:24PM in Deaths, funerals & probate 13 replies 741 views

CheeseSpreadButties

I am joint executor, with one of my sisters-in-law, to my mother-in-law's will.  She is aged 91 and has Alzheimer's.  Her first husband, my wife's and her sisters' father, died in 1987.  She got remarried in 2003 to Jack, who's first wife died in 1988.  My mother-in-law kept her own house after she remarried.  When Jack died, his estate was shared equally among his three children and my mother-in-law and as far as I know, no Inheritance Tax was paid.  I don't know the value of Jack's estate, but it was probably in the region of £400k - £600k.  My mother-in-law's estate will be in the region of £200k - £300k, so the total value of her's and Jack's estates could be over the Inheritance Tax threshold.  Do the previous spouse's Inheritance Tax allowances also still count, therefore making the total allowance for all four people to 4 x £325k = £1.3m?

RAS

It sounds like Jack had a will? Assuming England or Wales, you might want to pay £1.50 to get his will www.gov.uk/search-will-probate

Anything transferred from Jack to MIL would not have been liable for IHT.

p00hsticks

I can't comment on the intricacies of the previous partners allowances, but my understanding is that your mother in law will only be able to inherit that proportion of Jacks allowance that wasn't taken up by what was left to his three children - which given the value of the estate is likely  to be very little - 25k if the estate was worth £400k, and nothing if £600k.

https://www.gov.uk/guidance/transferring-unused-basic-threshold-for-inheritance-tax

theoretica

I understand there is a limit and noone can more than double the single person's inheritance tax through inheritance from deceased spouses.

CheeseSpreadButties

Thanks for your replies.  When Jack died, the sharing of his estate was all amicable to everyone.  He'd given me a copy of his will so there was no secrecy.  Let me put it another way.  When Jack died, could his first wife's IHT allowance be taken into consideration to get around IHT or does a first spouse's allowance become void if the surviving spouse remarries?

p00hsticks

CheeseSpreadButties said:

Thanks for your replies.  When Jack died, the sharing of his estate was all amicable to everyone.  He'd given me a copy of his will so there was no secrecy.  Let me put it another way.  When Jack died, could his first wife's IHT allowance be taken into consideration to get around IHT or does a first spouse's allowance become void if the surviving spouse remarries?

I'm afraid I don't know the answer to your question, but I'm also not sure why it is of any real concern to you now, unless you were also executor of Jacks will and for some reason have become concerned that IHT was due and wasn't paid ? My understanding is that probate for Jacks estate couldn't have been obtained without paying any IHT due - RAS's link above would not only provide a copy of the will, but also the grant of probate which will show the gross and net figures declared for the estate, which will give a clear idea of the value given at the time and help you determine if there was any possibilty of IHT being due. You don't mention when Jack died, but it sounds possible that the childrens share was fully covered by his IHT allowance, and, as spouse,  m-i-l's share would be exempt.

From what you say your mother-in-laws estate is also gonig to be below her individual IHT allowance.

So, other than posing an interesting legal question, it seems to me that whether the IHT allowance of deceased spouses is still available to a surviving spouse after a subsequent remarriage, the answer is probably of no significance in your particular case.

Keep_pedalling

Jacks estate could very well have used the transferable NRB from his first wife, which would have avoided IHT on the size of estate you are talking about. There is is no available transferable estate available for your MIL but as her estate is well under her NRB it is not needed anyway.

https://www.morrlaw.com/wills-trusts-and-estate-administration/second-marriages-inheritance-tax-allowances/

CheeseSpreadButties

Again, thanks to everyone for your responses.  I now have copies of Jack's will and grant of probate and although his estate was just over the allowance, the total including my MIL's estate will be below their joint allowances.  So no unexpected complications for us in the future.

poppystar

CheeseSpreadButties said:

Again, thanks to everyone for your responses.  I now have copies of Jack's will and grant of probate and although his estate was just over the allowance, the total including my MIL's estate will be below their joint allowances.  So no unexpected complications for us in the future.

The fact that he left some of his money to his children rather than all to his wife will mean that some of his allowance will have been used reducing the joint allowance ie. It won’t be £650k if that was what you meant by ‘joint allowances’. 

Keep_pedalling

CheeseSpreadButties said:

Again, thanks to everyone for your responses.  I now have copies of Jack's will and grant of probate and although his estate was just over the allowance, the total including my MIL's estate will be below their joint allowances.  So no unexpected complications for us in the future.

I am not sure why you are still referring to joint assets when your MILs estate is under her NRB. Her husband’s estate is now closed and dealing with her estate is not linked to his as none of his transferable NRB can be claimed. 

theoretica

There is no way that Jack's death could have used MIL's allowances in advance of her death - his estate has been sorted, you will only need to consider hers and she will definitely have her own full allowance left.