Inheritance Tax NBR & RNRB

Shoeaholic58

Apologies if this question has been raised before, the more I read online, the less clear it becomes, but simple question. My partner & I own a property together and have written mirror wills so that property & assets are left to each other. I'm aware the NBR is £325.000, my confusion lies with the additional £175.000 RNRB. Everything I read about RNRB says it can only be applied if property is left to a direct decendent, in this case our daughter. Does this mean that by leaving our share of the property to each other, that we would not get the £175.000, therefore meaning our entire allowance per person would be just £325.00. Thanks

poseidon1

Assuming you are married or in a civil partnership, your mirror wills are effective to secure two lots of RNRB - see link below

https://www.clarkewillmott.com/insights/the-inheritance-tax-residence-nil-rate-band/

However, if you are not married current mirror  Wills loses one of the RNRB as set out in the article.

Keep_pedalling

The important thing here is your marital estate status. If you are married or in a civil partnership anything left to the survivor is exempt an does not use up any of your NRB or RNRB, which can be transferred to the estate of the surviving spouse / CP.

If you are not married or in a CP then you should seriously consider doing one of those two things.

Shoeaholic58

Apologies I should have said, we are not married, but are seriously considering it

Keep_pedalling

Shoeaholic58 said:

Apologies I should have said, we are not married, but are seriously considering it

If either of you have assets exceeding £325k then a surviving spouse could be left facing an IHT bill to pay. Being unmarried my also have serious implications on pensions and death in service benefits.

Shoeaholic58

We both own a house that is currently valued at around £500k, so 250k would be eaten up straight away. We have substancial individual savings pots too. I also have a DB pension after working nearly 48 years in BT and I know he would not get a widows pension if we were not married, this is one of the main drivers to get married. I just wanted to know if we would get one lot of RBRB on death of 1st one of us and think a previous post has confirmed we would, feel free to correct me if I'm wrong. 

Keep_pedalling

Shoeaholic58 said:

We both own a house that is currently valued at around £500k, so 250k would be eaten up straight away. We have substancial individual savings pots too. I also have a DB pension after working nearly 48 years in BT and I know he would not get a widows pension if we were not married, this is one of the main drivers to get married. I just wanted to know if we would get one lot of RBRB on death of 1st one of us and think a previous post has confirmed we would, feel free to correct me if I'm wrong. 

As it stands on the first death the RNRB cannot be claimed and it can’t be transfered to the surviving partner. The only way you could use the RNRB of the first to die would be to leave your home to your daughter. Are you living together and renting the other place out? If you are the RNRB can’t be claimed against that property.

Marriage / CP  is a bit of a no brainer in your circumstances, but even then you are deep into IHT territory, so some independent financial advice might be worth doing. 

poseidon1

Keep_pedalling said:

Shoeaholic58 said:

We both own a house that is currently valued at around £500k, so 250k would be eaten up straight away. We have substancial individual savings pots too. I also have a DB pension after working nearly 48 years in BT and I know he would not get a widows pension if we were not married, this is one of the main drivers to get married. I just wanted to know if we would get one lot of RBRB on death of 1st one of us and think a previous post has confirmed we would, feel free to correct me if I'm wrong. 

As it stands on the first death the RNRB cannot be claimed and it can’t be transfered to the surviving partner. The only way you could use the RNRB of the first to die would be to leave your home to your daughter. Are you living together and renting the other place out? If you are the RNRB can’t be claimed against that property.

Marriage / CP  is a bit of a no brainer in your circumstances, but even then you are deep into IHT territory, so some independent financial advice might be worth doing. 

Agree, marriage for the OP is a no brainer for a variety of reasons. However marriage immediately nullifies existing Will so that will need to be redone to reflect new marital status.

Also agree their respective financial status ( after marriage) would certainly benefit from appropriate independent advice ( widow/widowers pensions; transferable spouse ISAs; transferable marriage allowances etc)

Shoeaholic58

Thanks for all your answers. Finally got my head around it all. When we updated our wills last year, same time as doing LPA's we mentioned that we were potentially thinking of getting married and this is noted on the wills so there will be no need to update them. Once married I'll update my workplace pension "Expression of wish" that it will go to spouse so that he 100% receives it. Will sort out ISA's. No need to concern myself with marriage allowances as I'm retired. Thank you all once again.