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Where Taxpayers and Advisers Meet

IHT allowances

popular
Posts: 9
Joined: Sat Jun 17, 2017 3:26 pm

IHT allowances

Postby popular » Tue Nov 12, 2019 12:24 pm

Our mother has very recently died and we are seeking possible IHT exemptions to which she may be entitled , over and above the customary £325,000.
Her husband is still alive but due to acute dementia is in care. If and when he dies he will not use his £325,000 as he long since transferred all his assets to his spouse as a consequence of his dementia.
Is there any way we can claim her husband’s £325,000 allowance for our mother in order to reduce her IHT liability.

pawncob
Posts: 4392
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

IHT allowances

Postby pawncob » Tue Nov 12, 2019 7:55 pm

Did she die in the US or the UK?
Previous posts suggest she had no assets. When did she acquire these?
With a pinch of salt take what I say, but don't exceed your RDA

logistic
Posts: 6
Joined: Thu Jul 09, 2015 5:07 pm

Re: IHT allowances

Postby logistic » Tue Nov 12, 2019 11:09 pm

Thank you for your interest Pawncob
This case has no connection with my own earlier personal post, and I posed the question on behalf of friends who are not registered with Taxationweb
They would be grateful for any advice offered.

pawncob
Posts: 4392
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: IHT allowances

Postby pawncob » Wed Nov 13, 2019 1:43 pm

You could transfer assets to husband,so IHT exempt, and using power of attorney, control them until he dies and utilises his own lifetime exemption. (and hers)
With a pinch of salt take what I say, but don't exceed your RDA

AnthonyR
Posts: 303
Joined: Wed Feb 08, 2017 2:33 pm

Re: IHT allowances

Postby AnthonyR » Thu Nov 14, 2019 5:20 pm

The first thing to identify is what her Will says. If the Will passes the assets to the spouse then this will already be exempt and then allow the use of the husbands allowance. If the assets pass to anyone else (her children I would assume) then there is an option to chose to vary the will to pass the assets to the husband and use the spousal exemption and then his allowance on death (the option suggested by pawncob).

However, the issue with this is that if the assets were originally gifted to the mother to avoid care fees then the assets could well be expended funding his care costs, although this could possibly be avoided through the use of an IIP trust. Although I'd take care if you were looking to gift under a power of attorney as this is a complex area and you need specific powers to do this.

If your mother has no Will then she will be subject to the intestacy rules with the first £250,000 passing to her husband and the remainder split 50:50 between the husband and the children. This does give the benefit of the spousal exemption, but does not give the flexibility to vary into trust.

The other thing to consider if whether your mother left the family home, or a share in it, to children or grandchildren as this would entitle her to a further £150,000 residence nil rate band.
Anthony Rogers LLB CTA TEP
Fusion Partners LLP
anthony@fusionpartners.co.uk


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