Posthumous inheritance and subsequent IHT

DRS1

wrenlegs said:

Yes, I’m sorry.i have sent them a link so they can explore the board. I guess if I try this way. Sarah and John are siblings. Sarah passes away first and leaves her estate to her children. There was no house so the children benefit from £650k IHT exemption (they didn’t use it all). 3 years later John passes away. Even though he knows Sarah has passed, he never updated his will and so his house and other assists are left to Sarah. Because Sarah died (before John) will the inherited house and assets pass to Sarah’s children as per her will and can the children make use of more of the £650k inheritance tax exemption or is it now too late? Does that make it clearer?

What does John's will say about the situation where Sarah dies first?  That is what will apply not Sarah's will.

Flugelhorn

it depends on John's will - what does that say about where the inheritance goes if Sarah predeceases him?

it may be that it passes to her children (or may go to others) 

IHT is dependant on John's estate at this stage, not Sarah's

Keep_pedalling

wrenlegs said:

Yes, I’m sorry.i have sent them a link so they can explore the board. I guess if I try this way. Sarah and John are siblings. Sarah passes away first and leaves her estate to her children. There was no house so the children benefit from £650k IHT exemption (they didn’t use it all). 

3 years later John passes away. Even though he knows Sarah has passed, he never updated his will and so his house and other assists are left to Sarah. Because Sarah died (before John) will the inherited house and assets pass to Sarah’s children as per her will and can the children make use of more of the £650k inheritance tax exemption or is it now too late? Does that make it clearer?

If John’s will did not have a clause in it to say who inherited if Sarah pre deceased him then the bequest would pass to her children per stripes. The children will be inheriting from John’s estate directly. His estate will only have £325 of exemptions unless he was a widow in which case it will be double that. No residential NRB will be available as the children are not his. 

DRS1

Keep_pedalling said:

wrenlegs said:

Yes, I’m sorry.i have sent them a link so they can explore the board. I guess if I try this way. Sarah and John are siblings. Sarah passes away first and leaves her estate to her children. There was no house so the children benefit from £650k IHT exemption (they didn’t use it all). 

3 years later John passes away. Even though he knows Sarah has passed, he never updated his will and so his house and other assists are left to Sarah. Because Sarah died (before John) will the inherited house and assets pass to Sarah’s children as per her will and can the children make use of more of the £650k inheritance tax exemption or is it now too late? Does that make it clearer?

If John’s will did not have a clause in it to say who inherited if Sarah pre deceased him then the bequest would pass to her children per stripes. The children will be inheriting from John’s estate directly. His estate will only have £325 of exemptions unless he was a widow in which case it will be double that. No residential NRB will be available as the children are not his. 

I think the will would need to actually say that.  If not the bequest would lapse.  But if it was professionally done then there probably would be such a provision in the will.

We are of course assuming that Sarah is the closest relative to John.  For all we know there is a spouse civil partner or children knocking around

wrenlegs

Hi all, thanks for the replies. No predeceasement clauses - it just goes to Sarah and Sarah is next of kin. John has no spouse and no children. Then Sarah’s next of kin is my friend (her daughter). And in Sarah’s will all was left to them. This is of course as far as I know. But I suppose hypothetically speaking, the question is, in an instance like this, could Sarah’s unused IHT allowance be used for John’s estate, and the answer seems to be no. They will find out soon enough I suppose. But it was something I’d not thought of really.

Emmia

This illustrates why properly drafted wills are so important.

DRS1

wrenlegs said:

Hi all, thanks for the replies. No predeceasement clauses - it just goes to Sarah and Sarah is next of kin. John has no spouse and no children. Then Sarah’s next of kin is my friend (her daughter). And in Sarah’s will all was left to them. This is of course as far as I know. But I suppose hypothetically speaking, the question is, in an instance like this, could Sarah’s unused IHT allowance be used for John’s estate, and the answer seems to be no. They will find out soon enough I suppose. But it was something I’d not thought of really.

I think you need to get it out of your head that it "goes to Sarah".  It doesn't - it may go to her children but if it does that would be direct from John so Sarah's will and her IHT allowance would not be relevant. 

Hopefully there is a solicitor winding up John's estate.

wrenlegs

Yes a solicitor is dealing. But you’re right, the clincher is that it is no longer coming to Sarah. That then removes any discussion and thoughts about remaining IHT for Sarah. Thanks for the explanations!

Triumph13

The key question is did John leave everything to Sarah, or just the house, with the residue of the estate going elsewhere?  Worst case is if it was "House to Sarah, everything else to the cats' home" - in which case the cats' home will get the house.

Keep_pedalling

DRS1 said:

Keep_pedalling said:

wrenlegs said:

Yes, I’m sorry.i have sent them a link so they can explore the board. I guess if I try this way. Sarah and John are siblings. Sarah passes away first and leaves her estate to her children. There was no house so the children benefit from £650k IHT exemption (they didn’t use it all). 

3 years later John passes away. Even though he knows Sarah has passed, he never updated his will and so his house and other assists are left to Sarah. Because Sarah died (before John) will the inherited house and assets pass to Sarah’s children as per her will and can the children make use of more of the £650k inheritance tax exemption or is it now too late? Does that make it clearer?

If John’s will did not have a clause in it to say who inherited if Sarah pre deceased him then the bequest would pass to her children per stripes. The children will be inheriting from John’s estate directly. His estate will only have £325 of exemptions unless he was a widow in which case it will be double that. No residential NRB will be available as the children are not his. 

I think the will would need to actually say that.  If not the bequest would lapse.  But if it was professionally done then there probably would be such a provision in the will.

We are of course assuming that Sarah is the closest relative to John.  For all we know there is a spouse civil partner or children knocking around

Senior moment from me there. What I said is true but only in the case where the original beneficiary was a direct descendant of the testator. If, as seems, that was not the case  then the bequest fails and it falls to the residual beneficiaries and if there are none then intestacy rules kick in so it could still go to her children if she was the sole residuary beneficiary.