Would there be any IHT to pay - intestate

beckyw_2

Married couple with 3 children (24,21,17). House is in joint names (value around 550). Partner 1 has around 70k in sole name, 50k just been put in joint account, partner 2 has around 650k in sole name.

If partner 2 dies intestate, would there be any inheritance tax to pay? 

Keep_pedalling

With those sort of assets it would be pretty dumb not to make wills. 

If partner two dies first all the joint assets go to the surviving spouse by survivorship. The £650k will be split as follows, the first £322k plus 50% of the remainder to the spouse. The other 50% would go to the children using up the entire £325k nil rate band, but no IHT would be payable. IHT would be payable on the surviving spouses estate on anything over £650k. 

Having one spouse holding the vast bulk of their savings may not be very efficient for income tax purposes, especially if spouse 1 is a low earner. 

Flugelhorn

say partner 2 died it would mean that administration  would be needed to get at the £650K whereas if it was in joint name it would directly to partner 1 with no delay in accessing it 

Marcon

beckyw_2 said:

Married couple with 3 children (24,21,17). House is in joint names (value around 550). Partner 1 has around 70k in sole name, 50k just been put in joint account, partner 2 has around 650k in sole name.

If partner 2 dies intestate, would there be any inheritance tax to pay? 

Depends what the assets are worth at the time they die and what IHT regs look like.

Why would partner 2 die intestate - what's to stop them making a will? Death doesn't politely hang around until someone has got around to doing that...

madbadrob

 answer.  Keep_pedalling said:

With those sort of assets it would be pretty dumb not to make wills. 

If partner two dies first all the joint assets go to the surviving spouse by survivorship. The £650k will be split as follows, the first £322k plus 50% of the remainder to the spouse. The other 50% would go to the children using up the entire £325k nil rate band, but no IHT would be payable. IHT would be payable on the surviving spouses estate on anything over £650k. 

Having one spouse holding the vast bulk of their savings may not be very efficient for income tax purposes, especially if spouse 1 is a low earner. 

I am probably understand the rules of IHT wrongly here.  If partner 2 dies leaving 650k (I am ignoring the house assuming the OP means Joint owners and not TIC).  Surely as partner 2 is the first to die that the IHT threshold of £325k as been reached and there would be IHT to pay on the other 325k and that would be split as you stated 50% to spouse and 50% to children.  No IHT would be paid though if spouse 2 had a will and left all to partner 1 with the unused allowance then passing to the surving spouse.  Or do I have the rules here wrong

Rob

Keep_pedalling

madbadrob said:

 answer.  Keep_pedalling said:

With those sort of assets it would be pretty dumb not to make wills. 

If partner two dies first all the joint assets go to the surviving spouse by survivorship. The £650k will be split as follows, the first £322k plus 50% of the remainder to the spouse. The other 50% would go to the children using up the entire £325k nil rate band, but no IHT would be payable. IHT would be payable on the surviving spouses estate on anything over £650k. 

Having one spouse holding the vast bulk of their savings may not be very efficient for income tax purposes, especially if spouse 1 is a low earner. 

I am probably understand the rules of IHT wrongly here.  If partner 2 dies leaving 650k (I am ignoring the house assuming the OP means Joint owners and not TIC).  Surely as partner 2 is the first to die that the IHT threshold of £325k as been reached and there would be IHT to pay on the other 325k and that would be split as you stated 50% to spouse and 50% to children.  No IHT would be paid though if spouse 2 had a will and left all to partner 1 with the unused allowance then passing to the surving spouse.  Or do I have the rules here wrong

Rob

Everything passing to the spouse is covered by spousal exemption, only the amount going to the children would eat into the NRB. My original statement was incorrect the entire NRB would not be used up as the children only get £164k of £650k. So no IHT on the first death.