Inheritance tax

DIYHero

My wife as just died, and her will states that I inherit 50% of the property and her two sons inherit 25% each. They are my step sons. The property is valued at £300000. There is also about £100000 in savings, which is split as follows £45000 to me and £27500 each to the two sons.

The two boys want to give me everything so I inherit everything. So basically they are refusing the inheritance. But the solicitor says I will have to pay inheritance tax on anything over the £325000 limit.

I thought there was no inheritance to pay between husband and wife.

So the total inherence is £400000

Would I have to pay inheritance tax in this situation.

poseidon1

If the facts are exactly as you state, other than the fact that £47,500+ £27,500 does not equal £100,000, your step sons agreeing to disclaim or redirect their inheritance to you should mean there is no inheritance tax to pay, due to the general exemption for gifts between spouses.

However, there is one situation unknown by pretty much everybody in the UK, where that blanket spouse exemption does not apply, and that is where the surviving spouse is not british born, and has not acquired UK domicile for IHT purposes under the new tests introduced in April 2025.

Under those rules gifts to surviving non dom spouse are capped at £325k, with any assets above that subject to the 40% tax tariff. The following article explains -

https://ts-p.co.uk/insights/inheritance-tax-exemptions-for-non-domiciled-spouses-or-civil-partners/

However, unless you by virtue of your nationality are caught by these provisions ( for which there does exsist means to overcome the issue ), its difficult to understand the solicitors viewpoint on this.

Do you have any other relevant facts to share, which might throw more light on the solicitors' stance? For instance, you are actually considered married in the eyes of the English legal system?

DiamondLil

https://forums.moneysavingexpert.com/discussion/comment/82016056#Comment_82016056

Ahem ! There are two sons, each to inherit £27.500. Arithmetic sir, Arithmetic !

DIYHero

Read the figures again, it say £45000 and £27500 so £45000 plus 2 lots of £ 27500 make £ 100000.

We were both born in the UK and got married in the UK in a registry office.

The solicitor as gone off to find out and wants the three of us to see her in two weeks time.

Just thinking about the marriage thing, I wonder if the solicitor thinks we were cohabiting because we didn't have the same surname, she never took my name when we got married 21 years ago. But it does say on her will I bequeathed to my husband, than my name.

Flugelhorn

https://forums.moneysavingexpert.com/discussion/comment/82016109#Comment_82016109

It could be the marriage thing and the different surnames

Keep_pedalling

In you wife’s will were you given the right to remain in the house as long as you wished? If that was the case they her sons have not actually inherited anything yet it would pass into trust and you would be the beneficial owner.

If that is the case her sons might make a different decision on their inheritance.

DIYHero

https://forums.moneysavingexpert.com/discussion/comment/82016194#Comment_82016194

The will states I can live here until I am 68, am 61 now, and then It must be sold, but both the boys have said I can live here for as long as I want to. Both boys don't want to inherit anything as It will cost them a lot of money in Spain where they both live and they are quite happen to wait until I die to inherit.

Brie

"they are quite happy to wait until I die to inherit"

It's very kind of them. But are they in your will?? Or will they be happy if you change your will to give them to the donkey sanctuary or whomever?

Sorry for your loss.

DIYHero

https://forums.moneysavingexpert.com/discussion/comment/82016960#Comment_82016960

The boys have been in my wills for the last 15 years.

Brie

https://forums.moneysavingexpert.com/discussion/comment/82016973#Comment_82016973

Sounds like you're organised! I only mentioned it as it doesn't occur to everyone to ensure that stepchildren are named in a will and obviously without a will they wouldn't inherit. (as I understand it)

Keep_pedalling

The sensible thing for them to do is make a deed of variation to give you the right to remain for life. This protects both themselves and you and is the most tax efficient way to do this.

They would still not inherit until you died but it would protect them should you change your will or remarry, it would also protect you and avoid a forced sale of the house.