Wills

Keep_pedalling

monaymadlol said:

I was listening to the ML PODCAST and wanted to clarify something..

If my partner and I are not married, anything I leave to them even if under 325k,is subject to IHT? How could they tax physical possessions mean left to them?
And any Way around this? Gifting? Leaving to a sibling (not subject to IHT?) to then transfer over to partner In letter of wishes? (If that's legal?)

If both or either of you have assets exceeding the NRB you really should consider marriage or a civil partnership.

monaymadlol

Keep_pedalling said:

monaymadlol said:

I was listening to the ML PODCAST and wanted to clarify something..

If my partner and I are not married, anything I leave to them even if under 325k,is subject to IHT? How could they tax physical possessions mean left to them?
And any Way around this? Gifting? Leaving to a sibling (not subject to IHT?) to then transfer over to partner In letter of wishes? (If that's legal?)

If both or either of you have assets exceeding the NRB you really should consider marriage or a civil partnership.

What's nrb? 325k? Neither of us, but seems to be a ridiculous reason for couples to marry for financial loopholes? Just my opinion, I find that quite sad.

polar_pig

The NRB is the 'Nil Rate Band' and it's currently £325k. The NRB has been at this level for about 15 years, however (noting that you are young) it is likely to increase with time. 

If you are married you can pass any/all of your estate to your spouse without paying IHT on this amount. If all your estate passes to your spouse none of your NRB gets used. When the spouse subsequently dies they inherit the full NRB from the previous death as well as having their own. Their estate then doesn't pay IHT on the first £650k (currently) of the estate. However, none of this applies if you are not married. Whether you think that is a sufficient reason to get married or not is entirely up to you and your partner.

In addition, if you have 'direct descendants' that inherit your property, there is also a Residents Nil Rate Band (RNRB, currently £175k) that can further reduce IHT. Not sure if that might apply to you, now or in the future.

https://www.gov.uk/guidance/inheritance-tax-residence-nil-rate-band

Yes, you can gift money to anybody, including your partner. If you survive at least 7 years after the gift there is no IHT to pay on the gift. If you don't survive that long IHT will be due on your estate for that gift.

Keep_pedalling

monaymadlol said:

Keep_pedalling said:

monaymadlol said:

I was listening to the ML PODCAST and wanted to clarify something..

If my partner and I are not married, anything I leave to them even if under 325k,is subject to IHT? How could they tax physical possessions mean left to them?
And any Way around this? Gifting? Leaving to a sibling (not subject to IHT?) to then transfer over to partner In letter of wishes? (If that's legal?)

If both or either of you have assets exceeding the NRB you really should consider marriage or a civil partnership.

What's nrb? 325k? Neither of us, but seems to be a ridiculous reason for couples to marry for financial loopholes? Just my opinion, I find that quite sad.

It’s not a loophole and it is not the only reason to marry or form a civil partnership. What is really sad is the number of unmarried long term partners who leave a financial mess behind them because they bury their head in the sand about the financial consequences for their partner if they meet an untimely end. People in this situation are also the people most likely not to make a will or put lasting powers of attorney in place. 

relaxtwotribes

monaymadlol said:

Keep_pedalling said:

monaymadlol said:

I was listening to the ML PODCAST and wanted to clarify something..

If my partner and I are not married, anything I leave to them even if under 325k,is subject to IHT? How could they tax physical possessions mean left to them?
And any Way around this? Gifting? Leaving to a sibling (not subject to IHT?) to then transfer over to partner In letter of wishes? (If that's legal?)

If both or either of you have assets exceeding the NRB you really should consider marriage or a civil partnership.

What's nrb? 325k? Neither of us, but seems to be a ridiculous reason for couples to marry for financial loopholes? Just my opinion, I find that quite sad.

Not really a loophole as everybody’s estate benefits from a £325k NRB.  The Government, quite reasonably, legislated that the NRB is not utilised when the first of a couple dies and bequeaths their estate to the survivor.  The qualification for such being marriage or civil partnership.

monaymadlol

polar_pig said:

The NRB is the 'Nil Rate Band' and it's currently £325k. The NRB has been at this level for about 15 years, however (noting that you are young) it is likely to increase with time. 

If you are married you can pass any/all of your estate to your spouse without paying IHT on this amount. If all your estate passes to your spouse none of your NRB gets used. When the spouse subsequently dies they inherit the full NRB from the previous death as well as having their own. Their estate then doesn't pay IHT on the first £650k (currently) of the estate. However, none of this applies if you are not married. Whether you think that is a sufficient reason to get married or not is entirely up to you and your partner.

In addition, if you have 'direct descendants' that inherit your property, there is also a Residents Nil Rate Band (RNRB, currently £175k) that can further reduce IHT. Not sure if that might apply to you, now or in the future.

https://www.gov.uk/guidance/inheritance-tax-residence-nil-rate-band

Yes, you can gift money to anybody, including your partner. If you survive at least 7 years after the gift there is no IHT to pay on the gift. If you don't survive that long IHT will be due on your estate for that gift.

Thanks for the clarification. So, to be clear, if a couple is unmarried or not in a civil partnership, we still have 325k in assets available to be passed on WITHOUT paying IHT? 

Our assets currently do not exceed 325k each and likely won't for a long while, but I suppose may do with pensions etc later on.

We will need to read into this more.

Currently we have life insurance, income protection and now are sorting out POA and Will and letters of wishes

We have no children, this may or may not change in the future.

monaymadlol

Keep_pedalling said:

monaymadlol said:

Keep_pedalling said:

monaymadlol said:

I was listening to the ML PODCAST and wanted to clarify something..

If my partner and I are not married, anything I leave to them even if under 325k,is subject to IHT? How could they tax physical possessions mean left to them?
And any Way around this? Gifting? Leaving to a sibling (not subject to IHT?) to then transfer over to partner In letter of wishes? (If that's legal?)

If both or either of you have assets exceeding the NRB you really should consider marriage or a civil partnership.

What's nrb? 325k? Neither of us, but seems to be a ridiculous reason for couples to marry for financial loopholes? Just my opinion, I find that quite sad.

It’s not a loophole and it is not the only reason to marry or form a civil partnership. What is really sad is the number of unmarried long term partners who leave a financial mess behind them because they bury their head in the sand about the financial consequences for their partner if they meet an untimely end. People in this situation are also the people most likely not to make a will or put lasting powers of attorney in place. 

Yes, what is sad is people not having a will or poa, IE most people, not people who are actively looking into arranging this, regardless of their marital status.

polar_pig

monaymadlol said:

Thanks for the clarification. So, to be clear, if a couple is unmarried or not in a civil partnership, we still have 325k in assets available to be passed on WITHOUT paying IHT? 

Our assets currently do not exceed 325k each and likely won't for a long while, but I suppose may do with pensions etc later on.

Yes, if unmarried or in a civil partnership you can pass on up to £325k to your partner without paying IHT. However, you will need to consider what happens after the second death. If unmarried any unused remainder of the £325k allowance is lost after the first death. The remaining partner inherits from the first, but after the second death there is only a single £325k allowance available and IHT is payable on the rest unless they use the RNRB or give to charity. 

As previously stated, your pension is outside of your estate and can be passed to your partner (or others) with an "Expression of Wish". The NRB doesn't apply to pensions and no IHT is payable, even if above £325k.

monaymadlol

polar_pig said:

monaymadlol said:

Thanks for the clarification. So, to be clear, if a couple is unmarried or not in a civil partnership, we still have 325k in assets available to be passed on WITHOUT paying IHT? 

Our assets currently do not exceed 325k each and likely won't for a long while, but I suppose may do with pensions etc later on.

Yes, if unmarried or in a civil partnership you can pass on up to £325k to your partner without paying IHT. However, you will need to consider what happens after the second death. If unmarried any unused remainder of the £325k allowance is lost after the first death. The remaining partner inherits from the first, but after the second death there is only a single £325k allowance available and IHT is payable on the rest unless they use the RNRB or give to charity. 

As previously stated, your pension is outside of your estate and can be passed to your partner (or others) with an "Expression of Wish". The NRB doesn't apply to pensions and no IHT is payable, even if above £325k.

Thanks for that..so is anything else outside the NRB, or just pensions? What about physical assets and collectables, that would not be sold and just passed on, if they're not sold, they can not be taxed?

relaxtwotribes

Farmland, assets subject to Business Property Relief and Gifts out of Surplus Income all exempt from IHT.

A couple neither married, nor in a civil partnership have a combined total of £650k NRBs.