I have a client aged 82. Her husband is 85. Wife thinks she may pass away first.
Wife and husband have just separated and don’t expect to reconcile (very serious issues despite age which go beyond this question) although they expect not to divorce prior to death.
Wife has assets in her sole name of 1,025,000 including the former matrimonial home (£700k), another property (£300k) and a ‘cash’ estate of £25k. Husband has in his sole name a house worth £300k in which he now resides and no cash estate.
Owing to their separation Wife recently made a new will leaving everything to her daughters and wasn’t concerned about the IHT consequences.
One daughter now tells her she should leave dad a life interest in the matrimonial home (£700,000) to atleast save tax.
The other daughter lives in the matrimonial home. She and dad have serious issues such that they could never live together and so I’m not sure this is the answer!
I have been working out different options for wife all of which have resulted in IHT at some point even if only on second death owing to the value of their combined estate.
It has, however just crossed my mind as to whether wife could leave her husband a right to occupy the matrimonial home for say 1 week resulting in no IHT payable upon her death (spouse exempt)? All other assets passing to daughters currently within her NRB.
Hopefully the husband wouldn’t move in for a week and cause any problems. Assuming husband survives the week am I also correct in thinking that the value of the matrimonial home wouldn’t aggregate in his estate as he would not have any interest in the property upon his death- so no IHT on his death either?
Seems too good to be true. I guess not many spouses would agree to this so may not come up very often. Or I’m wrong- cringe.
Looking forward to your comments.
Wace Morgan Solicitors