Wills/Inheritance tax and property ownership

[davidbrt]

Need some advice - I own a property with my wife, but its in my name only. I also have three children from my first marriage. My property is worth in excess of the inheritance tax level. My wife and I both have a will drawn up. If I sell the property, and I gift each of my three children some money (in excess of the IHT level again) will this mean an inheritance tax liability upon my death in relation to the three gifts to the children, or, is it only triggered upon my wifes death as we have left everything to each other? When does the liability arise?

[dzug]

If you gift to your children now, there is a potential IHT liability on your death, because you won't have left everything to your wife - the gifts are added back in to your estate.

[themas]

Yes, there is a potential IHT liability, but if you live for 7 years after making the gifts they fall out of your estate for IHT purposes. Within the 7 years there is a sliding scale reduction in the IHT %, depending on how long after making the gifts you died.

Any liability is triggered on your death, not your wife's.

[Barmaid]

You need proper tax planning advice. However, what I would suggest is this:- you leave the property to your wife for life - then on your death, no IHT. On your wife's death the property left between your children. As you have an unused nil rate band since the gift to your wife was tax free this is added to your wife's unused nil rate band and thus you have effectively the use of two nil rate bands so it could result in no tax at all. That is a very simple suggestion and its effectiveness will depend on your exact circumstances so I would seek tax planning advice.

[davidbrt]

Thank you to all of your help and guidance - will seek further advice as suggested, its more complex than I thought.