Spouse inheritance tax exemption

bella21

theoretica said:

I once saw an article discussing exactly this point with bequests left to charities - the author seemed to say it could be calculated either way.

It seems much simpler to calculate if the estate is split and then inheritance tax worked out.

Of course, with less going to the spouse, more would be in the taxable bracket and there would be less to share overall. 

Unfortunately the less to share overall is not the issue for the spouse as they still believe that their proportion gets taken off first and tax is calculated after hers has been removed so if there is less in the "pot" for everyone else then that's just the way it is if you know what I mean. That's not to say they don't care it's just to say that's what they believe should legally happen because of the spousal exemption.

sheramber

What do the other beneficiaries say about it?  Do they agree with solicitor or the spouse?

If agreement cannot be reached then it be up to the court to decide.

doodling

Hi,

The exact wording is important here, but if the will says equal shares then, in the absence of anything else in the will, it means exactly that - I.e. the spouse gets the same amount of money as the others receiving equal shares.

The issue of inheritance tax is immaterial to the distribution if it isn't mentioned in the will, what gets distributed is whatever is left after tax is paid, even if it means that the size of the distribution to the spouse and the amount of tax end up being dependent on each other.

rach_anatasia

You're right to question this. I believe the surviving spouse should get the tax-free benefit first, then the inheritance tax applies to everyone else's shares.

IHT spouse exemption is automatic:

<code><a href="https://redcliffetraining.com/blog/iht-spouse-exemption" title="Link: https://redcliffetraining.com/blog/iht-spouse-exemption">https://redcliffetraining.com/blog/iht-spouse-exemption</a>

It's also unlimited between married couples. Even with a badly written will, you can't just ignore fundamental tax law. The spouse shouldn't have to subsidise everyone else's tax bill when they have a legal right to receive their inheritance tax-free.

I'd definitely get a second opinion on this one.

sheramber

rach_anatasia said:

You're right to question this. I believe the surviving spouse should get the tax-free benefit first, then the inheritance tax applies to everyone else's shares.

IHT spouse exemption is automatic:

<code><a href="https://redcliffetraining.com/blog/iht-spouse-exemption" title="Link: https://redcliffetraining.com/blog/iht-spouse-exemption">https://redcliffetraining.com/blog/iht-spouse-exemption</a>

It's also unlimited between married couples. Even with a badly written will, you can't just ignore fundamental tax law. The spouse shouldn't have to subsidise everyone else's tax bill when they have a legal right to receive their inheritance tax-free.

I'd definitely get a second opinion on this one.

Since you are replying to a post over a tear old I think this will have been sorted one way or the other.