Question Regarding Inheritance Tax

[Stargazer]

I was at my sister's today when she mentioned that her husband had not yet done anything about his "estate" and that there would be 40% to be paid before probate would be granted as their house was in his sole name. I was pretty sure (and told her) that there would be nothing to pay if you left everything to your wife. He owns a few houses so his estate would come to more than 2 million pounds but I don't think that would be subject to IT if he leaves it all to his widow.

[vetuste_ennemi]

I believe that that a spouse's limit (£325,000) on IHT is shared with their deceased husband or wife. I.e. £650,000.

There is no exemption from IHT, only the limit at which it is set.

[Mamyalynne]

Here's the overview.

https://www.gov.uk/inheritance-tax

With an estate of that size he should get something sorted, if only for peace of mind.

[tamborine]

The estate is half hers via marriage & spouse does not pay IHT.

[fiction-factory]

it's defintely worth seeing a solicitor for an estate of that size, although of course she might predecease him so IHT wouln't be an issue for her. Still, even if there is some IHT to be paid if he dies first (and I'm not sure there will), there should be plenty left over to see her through. But it's worth spending a few hundred pounds for a quick legal overview for peace of mind

[woofgang]

Saga say that a spouse or civil patrner can inherit the whole of their spouse/civil partners estate without incurring IHT. This was certainly the case when I lost my husband in 2011 and it still seems to be true. Additonally the IHT free allowance of the deceased spouse is also "inherited" by the survivor so effectively the IHT exempted amount is doubled for the surviving spouse/partners estate. I am not sure if there is any time limit on the doubled allowance thing. https://www.moneyadviceservice.org.uk/en/articles/gifts-and-exemptions-from-inheritance-tax

[woofgang]

ooops,not saga, money advice service who is .gov under another name (statutory body) and therefore ought to know.

[david small]

Ken Dodd avoided Inheritance Tax by marrying his long term partner just before his demise. So, she will not pay any Inheritance Tax as his surviving wife.

[Peter Pedant]

er I think he needs to see a solicitor and get things er rectified

at present she inherits under intestacy rules ( which she can look up as it depends on kids etc). they have also reccently changed.
After the tax free limit - which I agree is whackeroo for spouses ( half a million? but he is over that) - the tax is 40%
BUT
with planning this can be reduced sharply
for which you pay (for the advice)

delay here really will cost moolah

"but I don't think that would be subject to IT if he leaves it all to his widow." I agree - by WILL
which he doesnt have at present
but then she has to think of how she is going to leave the stuff she hasnt spent in her long and well deserved widowhood

[Stargazer]

they are both elderly but he is ailing. He has a Will but they seem to think that when he dies (which seems likely that he will die before her) she will have to pay 40% IT. I thought that if he left everything to his wife it would not be payable.

[Peter Pedant]

you are correct
she should get her affairs into order, as her IHT will be pretty mega - very roughly 40% above £650 000

and there are all sorts of jiggling you can do for man and wife.