First death uses up more than half IT allowance.

Rusty190

poseidon1 said:

Numbersup said:

Wow, surprised thanks,  that seems overly generous  -  so ideally   if  you're pretty sure   one of you is going to die  first, you should  transfer as much as poss into their name ? (As long as you know   a nursing home  isnt going to be needed for them) 

Even if  first to die  left 2million to  their spouse    - still  no immediate tax on it, the remaining one  still gets their £500k allowance   having blown  1.5 m  ?    (this isnt me  btw lol ,just trying to get my head round it in principle)

1st spouse to die could leave £10 million, 100 million , £1 trillion ( unlimited if you get my drift) to surviving spouse IHT free - spouse exemption is extremely generous.  Its on  the 2nd death of surviving spouse when IHT can raise its ugly death on estates exceeding £1 million for married couples at that point..

Is the exemption limit not £700,000 on 2nd death if the married couple do not have children? 

Keep_pedalling

No, it is £650k (2x NRB)

Rusty190

Keep_pedalling said:

No, it is £650k (2x NRB)

Yes - that's what I meant! 

pioneer

Sorry to come in on the side of this very interesting conversation, what would happen if one half of a married couple died intestate (no will, 1 million assets)  leaving one partner with 2 grown children?  

Keep_pedalling

Intestacy rules would apply. The surviving spouse gets the first £322k and 50% of the rest. The other 50% goes to the children. This would result in a IHT liability, unless the children made a deed of variation to pass more of the estate to the spouse.

saajan_12

You can think of it as inheritance from one spouse to the other doesn't count, but between them they can leave up to £1M to anyone ELSE. So if the first left £100k to a child and £550k to the spouse, then the 550k is exempt and the second spouse has £900k left to give to children / whoever. That includes the £550k from the first death.