Inheritance Tax

mike2149

Hello
Can anyone give me some advice?

• My father died in January 2008 and did not leave a will
• He was divorced (previous wife dead) and leaves 1 surviving son (me)
• I am married with 2 student daughters, aged 21 & 24
• Estate worth £370,000 consisting of cash, shares and house (£60,000) - no trusts were set up
• After using nil rate band (£300,000), IHT due is £28,000 - £342,000 left to me

IS THERE ANY WAY THAT THE CURRENT LIABILITY (£28,000) CAN BE REDUCED?

I'm aware that a deed of variation can be used to reduce a future IHT liability (mine), but is there any way that a deed could be used to reduce the current liability of £28,000?

Thanking you in advance

localhero

Hi Mike 2149,

Can you please clarify - was your dad married once or twice? If your dad was widowed (whilst still married) and then remarried/divorced, then he is entitled to claim the unused nil rate band from his previous wife.

If her estate passed to him, then your dad is entitled to a 100% uplift (ie can leave up to £600k free of IHT).

If he had only married once and she died after divorcing, then your options are limited. You could do a deed of variation and give the excess over £300k to charity - you will be personally worse off, but the IHT will have been avoided.