Inheritence Tax on family home.

LimaSigma1972

Hi, When a house is left solely to one's children in a will. I believe this can increase the threshold for IHT to £500,000 before incuring IHT. My question is this. If I left my 3 children 75% of my house that has an approximate value of £300k and left 25% to a friend. What effect would this have on the IHT threshold? Do they only increase the threshold if 100% of the house value is left to my children? If not how is the new threshold actually calculated? Any help with this question would be much appreciated.

Marcon

LimaSigma1972 said:

Hi, When a house is left solely to one's children in a will. I believe this can increase the threshold for IHT to £500,000 before incuring IHT. My question is this. If I left my 3 children 75% of my house that has an approximate value of £300k and left 25% to a friend. What effect would this have on the IHT threshold? Do they only increase the threshold if 100% of the house value is left to my children? If not how is the new threshold actually calculated? Any help with this question would be much appreciated.

For a home left to people who are a mixture of direct descendants, other relatives or other people, you must share the value of the home in proportion to the share of the property each direct descendant inherits.

https://www.gov.uk/guidance/inheritance-tax-residence-nil-rate-band

I've asked for this to be moved to https://forums.moneysavingexpert.com/categories/deaths-funerals-probate

LimaSigma1972

Thanks Markon I did try Google first but found it difficult to find an answer to my question. The links you provided are very helpful though. Thanks again.

madbadrob

I am assuming if youre worrying about IHT there is more than 25k in cash and other goods to push the estate into the IHT threshhold.  Also if youre married and your spouse goes first leaving the house solely to you this increases again even further.  Of course if your of an age where death is a long way off (under normal circumstances) then the threshold could have changed by then anyway.  

Other than that I think Marcon as given you the only other advice I could have shared

Rob

Keep_pedalling

Making a will with a clause leaving a specific property to anyone is not a great idea as there is a reasonable chance you may no longer own it by the time you die, and it may not have been possible to make a new one. 

madbadrob

Keep_pedalling said:

Making a will with a clause leaving a specific property to anyone is not a great idea as there is a reasonable chance you may no longer own it by the time you die, and it may not have been possible to make a new one. 

Im curious as to why this is not a great idea.  I wuold assume the wording would be I leave 20 anyone street any town to my son so long as I am the owner at the time of death.  

As I say am curious because ive never thought this was an issue

Rob

Sea_Shell

madbadrob said:

Keep_pedalling said:

Making a will with a clause leaving a specific property to anyone is not a great idea as there is a reasonable chance you may no longer own it by the time you die, and it may not have been possible to make a new one. 

Im curious as to why this is not a great idea.  I wuold assume the wording would be I leave 20 anyone street any town to my son so long as I am the owner at the time of death.  

As I say am curious because ive never thought this was an issue

Rob

So, think, what happens if the deceased had moved to 38 Anyother Street since the will was written?

Or sold up and moved into care and held the proceeds as cash!

That bequest would fail.

NedS

Sea_Shell said:

madbadrob said:

Keep_pedalling said:

Making a will with a clause leaving a specific property to anyone is not a great idea as there is a reasonable chance you may no longer own it by the time you die, and it may not have been possible to make a new one. 

Im curious as to why this is not a great idea.  I wuold assume the wording would be I leave 20 anyone street any town to my son so long as I am the owner at the time of death.  

As I say am curious because ive never thought this was an issue

Rob

So, think, what happens if the deceased had moved to 38 Anyother Street since the will was written?

Or sold up and moved into care and held the proceeds as cash!

That bequest would fail.

The will I'm presently looking at includes a clause or any other property which constitutes my principle residence at the date of my death which covers the event of a move/change of address, but does not cover the case of the primary residence having been sold and resulting assets held in cash.