Hi MSEers. I am trying to help my MIL with probate, IHT etc following the death of my FIL. Could you please confirm (or not) that my understanding of IHT position below is correct.
He had a simple Will leaving half of his estate to MIL and the remainder split equally between their children.
House is owned as joint tenants between FIL and MIL. The house is “excluded” from estate distribution and IHT calculations as it is transferred to MIL. RNRB can be transferred to MIL.
Joint money in bank current accounts/savings. Again, since this is transferred to MIL the value is “excluded” from estate distribution and IHT calculations.
FIL’s individual money in current accounts, savings and stocks & shares. Half is left to MIL, leaving the remainder to be transferred to his children. Only the money being transferred to his children is subject to IHT. If this value is less than the NRB, no IHT is due and the remainder of the NRB can be transferred to MIL. Conversely, if the Estate was larger and the amount being transferred to his children is greater than the NRB, IHT would be due on the excess and there would be no residual NRB to transfer to MIL.
Is there anything to be gained by completing a deed of variation to leave all FIL’s estate and NRB to MIL? Except hoping that enough time passes for any potentially exempt transfers to outlast 7 years and/or the NRB and RNRB increase in the future.
We would like to complete the Probate and IHT forms ourselves but are happy to use a professional should the situation be far more complex that we realise.
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Given the way this country's finances are going, I fear the reverse might be true.
You don't give any indication of the value of the estate, but if a property is likely to be a major component of what the children ultimately inherit when MIL dies, there should still be a hefty slug of non-IHT-able assets (her own NRB + 2xRNRB) even if your FIL's NRB has already been used and thus cannot transfer to her.
You can’t just make a DoV to avoid IHT then immediate gift the same amount to the original beneficiaries that would be seen as tax evasion. If we are talking about total assets in excess of £1M then it would be worth seeking some professional advice.