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IHT advice please

alsace-dave
Posts: 23 Forumite


in Cutting tax
My wife and I married in 2001. She was instrumental in bringing up my son, from my previous marriage from the age of 6 until he left home at 18, but never formally adopted him. Our house, mortgage free, is in my wife's sole name on Land Registry, as we never bothered to put it in joint names after we married. Our will states that whoever dies first, everything will be left to the survivor. If we both pass away, then everything is left to my son.
Statistically, it is likely me who will pass away first, as I'm both male and 5 years older than my wife. So whatever is left of my ISA, savings, premium bonds, SIPP etc will pass to my wife. Then when she passes away, the house (in her name), plus everything else will pass to my son.
Under current rules, what IHT is my son likely to be subject to? Will it just be £325,000 tax free, then usual 40% ?
Thanking you for your help
Statistically, it is likely me who will pass away first, as I'm both male and 5 years older than my wife. So whatever is left of my ISA, savings, premium bonds, SIPP etc will pass to my wife. Then when she passes away, the house (in her name), plus everything else will pass to my son.
Under current rules, what IHT is my son likely to be subject to? Will it just be £325,000 tax free, then usual 40% ?
Thanking you for your help
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Comments
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Good question - not sure what the situation is with him not being adopted by your wife - no doubt someone knows the answer
just to say that just because you have made wills now, it would not stop the survivor changing it completely and leaving it to whoever they like0 -
If she dies first you will be able to leave your done up to £825k IHT (your NRB, her transferable NRB plus your residential NRB). If it is the other way round I don’t believe her estate will be able to use your transferable RNRB, so it’s the exemptions will drop to £650k. If your total net worth is below that then it does not really matter, but if you estate are larger than that then it might be possible to get round that by putting the house as tenants in common and you changing your will to take advantage of your RNRB.1
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just to say that just because you have made wills now, it would not stop the survivor changing it completely and leaving it to whoever they like
Yes many people make mirror wills in case they both die at the same time, and assume that these wills will remain the same after just one dies.
Apparently the former situation is actually a very rare event thankfully, and in the latter case wills often get changed by the remaining partner. Makes sense anyway as ones situation can change, especially if the first partner dies when the living partner is not that old.
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Direct descendant includes adopted children:
https://www.gov.uk/guidance/inheritance-tax-residence-nil-rate-band
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Jeremy535897 said:Direct descendant includes adopted children:
https://www.gov.uk/guidance/inheritance-tax-residence-nil-rate-band0
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