Inheritance Guidance

[Milkman007]

I am an executor for my mother, who is still with us at 94. She lost her husband in 1995, all assets were passed to my mother. She is living in her property in London, worth Circ £1M

I'm keen to understand what her situation is re IHT, does she qualify for the double allowance because dads allowance was never used, so £650,000?

I read somewhere about IHT increasing to 1 Million, is that correct and if so when doe sit happen?

Been advised that could gift the property and she continues to live there, any views on this.

Many thanks.

[atticus]

Sam101 may know something about this. In the meantime, here are the government's pages about IHT:

https://www.gov.uk/inheritance-tax

[des8]

The £1,000,000 relief came into operation in 2020.
It is complex. so to save typing here is Ashford;s commentary on it: https://www.ashfords.co.uk/news-and-...give-1-000-000

[greyfur]

Your Dad's allowance would pass over as it was not used, so yes, £650.000. There are rules about what your mother gives away in financial terms, such as giving money for Birthdays, a marriage, etc. and they are taken into account regarding the allowance. You are allowed to give away so much each year. I think it was £3000, but it may have changed. Gifting the home and living in it would probably have implications regarding tax, such as if your mother paid rent to the person she gifted the house to whilst she was living in it.

[Sam101]

As long as any gifting has been within the normal allowances, then each person would have a nil rate band allowance of £325,000, plus a residential allowance, assuming they were home owners. In your Mother's case, as your Father past his estate to her, his allowances can all be used.

Therefore, when the time comes, you will need to make application to use both nil rate allowances and the residential allowance of £175,000 each, in total £1,000,000. Anything above that amount will be subject to 40% tax.

It would be beneficial if your mother maximise her gifting allowances. If she is able, £3000 each tax year and if she has not been doing this, she can use last years gift as well in this tax year, so £6000 could be gifted in such circumstances..

The gifting of property you are referring to is when the first to die is an owner of the home as Tenants in Common, so each will own 50% and the first to die gifts their part of the house , often to children. This is written in Trust with a lifetime interest for the survivor, who can live there until death, when the whole is then past on in accordance with the Will.

As far as Executorship goes, may I suggest that you read up on the applications needed. It is not too difficult to deal with this yourself rather than need to employ professionals to help.

Do ask further questions if yiou have them as there are many members who have a wide range of expertise.