Inheritance tax and transfer to spouse time limited for

786nabil786

Hi, 
Quick question if anyone can help please l.Father in law (FIL) is very poorly and owns half his house on deeds .mother in law (MIL) owns other half the house on deeds. If FILs will is to transfer all his estate in her name upon death then their house worth circa 350k would mean no inheritance tax as 175k each owns. (IE the limit for residential).But say she dies within 7 years OR OUTSIDE of 7 years from his death.does the whole property 350k's worth have any liability on the kids ie my wife and her brother's who the will states is in on her death or his if they predecease each other. What I mean to say is I know each spouse's unused inheritance tax share passes onto each other upon death but does that then pass onto children on the surviving spouse's death or is there a time limit for the unused inheritance tax for the residential nil-band rate??
Thanks

Flugelhorn

OK start at the beginning - how do they currently own this house - is it as JOINT TENANTS or TENANTS in COMMON?

RAS

And if they share ownership of the house and have other assets which they leave to their direct descendants, the IHT allowance could be £1m.

Keep_pedalling

The 7 year rule does not come into the equation with spouses as anything left to a spouse is exempt, so if FIL dies and leaves everything to his wife there is no IHT to pay regardless of the size of his estate. In addition neither his NRB or residential NRB is used and can both be transferred to her estate.

With both NRBs and both RNRBs available her estate would need to exceed £1M before any IHT was due, so by the sound of it IHT will never be an issue here unless one of them wins the lottery.