Hi, we have the following scenario and wonder if anyone has come across this…
In brief, client leaves a will as follows:-
5 pecuniary legacies of £10,000 to 5 charities
1 pecuniary legacy of £10,000 to a friend
Specific gift of her house to her nieces.
Residue to great nephews and nieces.
The Dec’d had made £272,130 worth of gifts (to her nieces) in the seven years prior to her death, which were pulled back in to calculate the IHT.
The chargeable estate is £273,964, this figure would be adjusted by a £50,000 exemption due to five gifts to charities, of £10,000.
This leaves a total chargeable estate of £546,094 and tax payable of £88,437.60.
However, due to the specific gift of the property to named beneficiaries, the cash assets total £93,899 only. This means that once the tax is paid, there would only be a couple of thousand pounds remaining. Not enough to settle the charitable legatees and in reality the balance will be soaked up in the legal fees…
In these circumstances how would the revenue treat the matter for tax purposes? If we cannot make the pecuniary gifts then we believe we cannot claim the exemptions which would in turn increase the tax due to be paid to the revenue. Is this the correct way of dealing with it?
Any help appreciated
Natalie Sheldon
Keebles LLP