Inheritance tax

EthicsGradient

I too have no children, and expect to leave much of my estate to nephews & nieces, but it seems reasonable to me to have a higher allowance for those for whom you have, directly or indirectly, been responsible for caring for. The state recognises it as a special relationship.

soulsaver

Can property allowance be passed on to a person that you've adopted?

I believe that it can't be passed to your biological offspring that has been adopted.

Got any single friends you could marry/enter a civil partnership with?

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82151934#Comment_82151934

I think there have been some rumblings that one way to simplify IHT and make it fairer, would be to forget RNRB and just increase the £325K nil rate band, by X amount. So maybe it will pop up in a budget/manifesto one day.

EthicsGradient

https://forums.moneysavingexpert.com/discussion/comment/82152003#Comment_82152003

Yes, an adopted child is explicitly named in the list. It talks about descendants, so I would have thought that would include any biological offspring, whether adopted by someone else, or only later acknowledged - though you might need DNA tests to prove it. But if that is officially discussed somewhere, they may have ruled against it.

Dead_keen

Can property allowance be passed on to a person that you've adopted?

As @EthicsGradient says, it can.

I believe that it can't be passed to your biological offspring that has been adopted.

Why do you believe that? The legislation explicitly says:

(1) … something is “closely inherited” … if it is inherited … by … a lineal descendant of [the deceased] …

(4) Any rule of law, so far as it requires an adopted person to be treated as not being the child of a natural parent of the person, is to be disregarded …

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/82152301#Comment_82152301

Step children are also covered.

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/82151972#Comment_82151972

Great plan if you know the date of your death, although if it runs out well before then there is always equity release.

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6684799/inheritance-tax

Those inheriting your estate will be impacted by all your choices, some will be positive, some will be negative, you have to look at in the round.

Someone with similar levels of frugality and income will likely have a smaller estate to begin with if the only difference to you is that they have had kids which they have paid to bring up etc.

Some choose to make other choices as a result of the rules, a friend married their partner of 20+ years because unmarried she wouldnt have been entitled to a share of his pension and would have paid more IHT. Know of two elderly friends who basically did the same despite only having a platonic friendship - obviously need to be careful that they dont get a claim to the estate as your spouse that you didnt want but they were the material inheritor of each others estate anyway so didnt impact them

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/82152214#Comment_82152214

That sounds sensible as the 325k threshold has been the same for far too long. With the increase in house prices and inclusion of pensions in the estate for IHT purposes a 1M allowance would not be silly, but maybe 500k is a more realistic number.

libra10

I can relate to the OPs point of view.

Last year, unfortunately, my brother in law passed away. He was single, never married or had his own children. However he was particularly close to my son who visited him every week. He also called at our house every week. We were all close.

He left legacies to our two children, and smaller legacies to our grandchildren. The remainder to his brother (my husband) and me.

He owned a house, had some shares and savings. The first bill to be paid was to HMRC - whacking £46,000!

It makes sense to consider means of reducing inheritance tax.