Good morning
I would really appreciate your thoughts on this one please.
Husband is also a widow and 50% of late wife’s standard NRB and full RNRB are available.
This is Wife’s first marriage and she is 24 years younger than Husband. In fact she is only a year older than Husband’s daughter. He has three kids. They’ve been married for about twenty years. Wife has three kids too. No joint children of Husband and Wife.
Matrimonial home is in Husband’s sole name- £700k. Liquid assets - £400k.
Wife has liquid assets of £900k but £600k of those were formerly Husband’s assets which he’s put in her name, presumably for income tax reasons.
Husband very much sees that cash of £600k as his asset which through her Will will be passed back to him (if she dies first) or more likely to his children if she is the survivor.
So the idea is that ultimately her kids will receive the £300k that is her cash and his kids will receive everything else.
I’ve made it very clear that there are no guarantees and either one of them can at any time change their Will without reference to the other spouse. They accept this so we can move on from this.
They asked me to confirm the inheritance tax position and this is what I’ve come up with. Assuming husband dies first because I’m very clear on the position the other way around.
Husband dies first - his estate is £1.1 million. Am I right in thinking that his estate does NOT comprise the £600k of cash he’s given wife - that this is her asset and will be part of her estate only? He still talks about it as being “his money” but in his wife’s name.
Wife is given IPDI in property only and he gifts maximum amount he can to his kids without incurring IHT, residue to wife.
Am I right in thinking that when calculating max amount this will be his NRB the 50% NRB from his late wife (I have made it clear in the Will that this should be included). Am I right to assume that it will NOT include his RNRB though as wife is given IPDI? So at this point property is not passing directly to children?
When wife dies she will have her own NRB but no transferable NRB. She will be able to transfer the unused RNRB from late husband but because she does not own a share in the matrimonial home she does not have her own RNRB. On current figures the value of her combined NRBs will be £500k.
Wouldn’t it be better for husband to transfer property into their joint names so that her estate can benefit from the RNRB also taking her NRB allowance from £500k to £675k? If husband is concerned maybe she can transfer some investments back to husband’s estate, at a value equivalent to the half share property value.
Your thoughts on this one would be greatly appreciated. Please let me know if I have missed anything.
Thank you
Deborah