Burden of IHT where residue left to exempt and non exempt beneficiaries

I’m dealing with an estate of just under £2m and the deceased left legacies to exempt and non exempt beneficiaries. He then left his residue to charities and 2 individuals. There will be some IHT payable but there is no mention in the Will of whether the residue as a whole bears the burden of IHT or whether it is just the non exempt beneficiaries who bear the burden of IHT.

I have tried to find a definitive answer on HMRC’s website but to no avail and am wondering if any other practitioners have had a similar scenario. As charities these days seem to be a little more aggressive in their dealings, I’m keen to ensure I have this right.

Thanks for any input.

The simplest solution is to divide the estate before IHT. The share that passes to the individuals will be subject to IHT and will have that sum deducted from their shares, leaving the residue to the charities.
Using this option will result in the exempt beneficiaries receiving a higher share of the estate once IHT has been paid.
Alternatively they could pay the IHT on the whole estate and then divide the estate accordingly. This may result in more IHT being paid but may appear more equal to the non-exempt beneficiaries.

Take a look at Ratcliffe Holmes v McMullan [1999] S.T.C. 262 and Benham’s Will Trusts (1995) STC 210 for example cases.

As I understand it, following Ratcliffe, the default position (where the Will is silent) is that the exempt beneficiary(ies) will enjoy the benefit of the exemption - option 1 in Francesca’s examples.

Thanks very much for your replies, that’s helpful.