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Where Taxpayers and Advisers Meet

Wills and IHT

Jason123456
Posts: 62
Joined: Wed Oct 11, 2017 1:53 pm

Wills and IHT

Postby Jason123456 » Thu Jun 06, 2019 3:43 pm

If a Mirror Will is prepared such that the residential property is kept within the family but the Residual estate which exceeds the IHT threshold is passed to Trustees, would IHT have to be paid,since this part of the estate has not passed directly to the surviving spouse?
And would the situation be different if the surviving spouse was one of the Trustees?

AGoodman
Posts: 1102
Joined: Fri May 16, 2014 3:47 pm

Re: Wills and IHT

Postby AGoodman » Fri Jun 07, 2019 3:53 pm

Spouse exemption is only available if the spouse takes an absolute (i.e. outright) interest or, if under some kind of trust, a right to the trust income.

"And would the situation be different if the surviving spouse was one of the Trustees?" No - irrelevant.

It sounds here as it you need to ensure that the spouse has a right to the income of the residuary estate.

Jason123456
Posts: 62
Joined: Wed Oct 11, 2017 1:53 pm

Re: Wills and IHT

Postby Jason123456 » Fri Jun 07, 2019 4:15 pm

Thank you AGoodman,...does the following wording cover the aspect you refer to, and consequently no IHT applies, as if wife inherited directly?

........Trustees to hold Residue of estate on Upon Trust to pay income thereof to my wife for her lifetime provided that my Trustees may lend any part of my estate to my said wife with or without security of interest ,the said loan being repayable on demand.........

AGoodman
Posts: 1102
Joined: Fri May 16, 2014 3:47 pm

Re: Wills and IHT

Postby AGoodman » Fri Jun 07, 2019 5:49 pm

Yes, this would create an IPDI for spouse and therefore should be exempt.

Jason123456
Posts: 62
Joined: Wed Oct 11, 2017 1:53 pm

Re: Wills and IHT

Postby Jason123456 » Sat Jan 18, 2020 12:52 pm

Sorry for belated further query......but am I correct in thinking that Form IHT205 would be the necessary form to complete by virtue of the fact tha the following would then apply...the last bullet statement below.

Form IHT205 - When to use this form ....Fill in this version of this form only when the person died on or after 6 April 2011. Fill in this form where the person who has died (‘the deceased’) was domiciled (had their permanent home) in the UK at the date of death and the gross value of the estate for Inheritance Tax is less than or equal to:
• the excepted estate limit
• twice the excepted estate limit and form IHT217 ‘Claim to transfer unused nil rate band for excepted estates’ is attached
• £1million and there is no Inheritance Tax to pay because of spouse, civil partner or charity exemption

AGoodman
Posts: 1102
Joined: Fri May 16, 2014 3:47 pm

Re: Wills and IHT

Postby AGoodman » Wed Jan 22, 2020 5:54 pm

Yes (assuming there were no massive gifts)


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