A young widow was left well provided for by her late husband who died 8 years ago. She has two boys and one girl. Out of her inheritance she purchased, in her sole name, a house for each of her boys for their respective occupation. She now wishes to gift to each son the house of his residence.
The houses are currently valued at £300,000 and £280,000. Both are mortgage free. The widow also wishes to make a cash gift of £130,000 to her daughter.
The widow's estate after the gifts will be worth around £850,000 including her house (worth around £600,000). Accordingly, with her NRB and RNRB and the unused NRB and RNRB from her husband I believe she will avoid IHT.
I believe that the 14 year rule will apply and if she dies within 14 years and more than 7 years, both the gift of the second house and the cash gift will be taken into the calculation of IHT. Adding the total value of the second and third gifts (£410,000) to her estate would make a total chargeable to IHT of £1,260.000. The available reliefs (including the RNRB from the year 2020) would be £1,000,000 with IHT paybale on £260,000, with taper relief.
My questions are:
1, Am I correct in my analysis?
2.Is there some way to avoid the 14 year rule?
3.Possible daft question, if the widow transferred the two houses and the cash to one son at the same time would that count as I transfer? if so could there then be staged transfers with that son making an onward transfer of house 2 and the cash to his next sibling as a PET who could then similarly transfer the cash to his sister.
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