Blended family - IHT, Wills, you name it!

ChickenLicken12

Hoping this is the correct place to post

This is our story:
History:

Wife (me): 
I was widowed - late spouse left all to me - estate didn’t exceed thresholds. 
We had 2 children 
I remarried. 
I entered new marriage with one property. 
I bought a new property with new husband. 

New Husband: 
He bought house. 

He met and lived with partner who had a toddler. 

The child was born in EU country and both mum and biological father were from that EU country
Biological father refused the opportunity for any adoption. 
My husband split from partner after 10 years
He continued to be a dad and 25 years on father - daughter relationship continues and is as strong now as any such relationship  
On turning 18 she changed her name to my husband’s by deed poll as there is no adult adoption in UK. 

Now: 

Between us we have three properties. 

The marital home and the two properties we each had when we got married. 

Questions: 
1) does the IHT allowance from my late husband transfer over to me? 

2) my husband wants to leave his property (and their former family home) to his “daughter”.  should he die first can we assign his IHT allowance to her so she reduces her IHT bill? 

Or is any allowance in one big melting pot and it’s relevant to the “estate” rather than what’s left to whom? 

3) we want to leave a third of the marital property to each child. Would my two children be exempt from IHT as they have both my and my late husband’s IHT allowance?

4) Does my step daughter need to become a British Citizen to allow her to inherit the house and her part of the marital home (this was the house she was brought up in so her family home) 

5) Does the fact my step daughter changed her name to my husband’s the moment she reached 18, had had no contact with biological father who refused any adoption and has been brought up by my husband since the age of three and has been her Dad ever since then count for anything in the eyes of the law and inheritance? 

Or should we just sell and go on lots of holidays … ?? 

Thanks 

Keep_pedalling

ChickenLicken12 said:

This is our story:
History:

Wife (me): 
I was widowed - late spouse left all to me - estate didn’t exceed thresholds. 
We had 2 children 
I remarried. 
I entered new marriage with one property. 
I bought a new property with new husband. 

New Husband: 
He bought house. 

He met and lived with partner who had a toddler. 

The child was born in EU country and both mum and biological father were from that EU country
Biological father refused the opportunity for any adoption. 
My husband split from partner after 10 years
He continued to be a dad and 25 years on father - daughter relationship continues and is as strong now as any such relationship  
On turning 18 she changed her name to my husband’s by deed poll as there is no adult adoption in UK. 

Now: 

Between us we have three properties. 

The marital home and the two properties we each had when we got married. 

Questions: 
1) does the IHT allowance from my late husband transfer over to me? 

That is an option 

2) my husband wants to leave his property (and their former family home) to his “daughter”.  should he die first can we assign his IHT allowance to her so she reduces her IHT bill? 

Or is any allowance in one big melting pot and it’s relevant to the “estate” rather than what’s left to whom? 

Anything left to her will used up at least some of his NRB and if the house is worth more than £325k IHT will be payable. 

3) we want to leave a third of the marital property to each child. Would my two children be exempt from IHT as they have both my and my late husband’s IHT allowance?

The best option here would be for your wills to create an immediate post death interest trust. This places legal ownership with a trust but leaves beneficial ownership with the surviving spouse. This is covered by spousal exemption so no IHT to pay on the first death and no CGT liability when the house is eventually sold

4) Does my step daughter need to become a British Citizen to allow her to inherit the house and her part of the marital home (this was the house she was brought up in so her family home) 

No. In any case unless she wants to move to the UK I would expect her to instruct the executors to sell it and take the proceeds. That may be necessary to pay IHT anyway.

5) Does the fact my step daughter changed her name to my husband’s the moment she reached 18, had had no contact with biological father who refused any adoption and has been brought up by my husband since the age of three and has been her Dad ever since then count for anything in the eyes of the law and inheritance? 

No

Or should we just sell and go on lots of holidays … ?? 

Thanks 

You should both sit down with a STEP solicitor to discuss what you want to achieve and get them to draw up appropriate wills.

ChickenLicken12

Thank you. That is hugely. 

My “step daughter” is resident in the UK and has been for 25 years - has settled status only . 

Think we definitely need to see a STEP soliciitor to draw up our wills! 

Thank you