IHT Allowance

[cliff99]

A very recently deceased spouse has left her estate to her husband. The husband would prefer his late wife’s estate to go to their children by executing a deed of variation in the children’s favour.

He has been informed that if he should do this, then he will lose his right to claim his late wife’s unused nil rate £325,000 IHT allowance on his own eventual demise.

Is the advice he has received correct, and if so is there any other way in which he can renounce this inheritance, yet preserve his eventual right to claim his spouse’s unused IHT allowance.

[jerome.lane]

The advice is correct; if the wife's nil rate band is used up via a deed of variation, then there will be no transferable nil rate band on second death.
The gamble is whether a potentially exempt transfer of assets now by the widower would succeed and preserve the transferable nil rate band.
Depending on the assets involved and any potential reliefs, there could be other options although that is probably outside this platform.