WHEN it comes to Inheritance Tax there are Inheritance Tax rules for married couples and civil partners.
When you die, assets left to your spouse, or your civil partner, are exempt from Inheritance Tax, provided they are living in the UK.
If the first partner dies, and leaves their entire estate to their partner, there is no tax to pay. If the first person in the marriage, or civil partnership, dies, and if there are any thresholds which have not been fully used, the unused part can go to the surviving partner.
What this means is that the basic tax free threshold can be as much as £650,000 for the surviving partner if none of the £325,000 was used.
If the estate’s value is below the threshold you still need to report it to HMRC. If you give your home to children, be that your own children, fostered or adopted children, your threshold can increase to £500,000.
If you are married, or indeed in a civil partnership, and your estate is worth less than your threshold, any unused threshold can be added to your spouse or partner’s threshold when you die which means their threshold can then be as much as £1million.
However, if your partner has left bequests to others (and lifetime gifts made within seven years of death), their estate may attract Inheritance Tax if it’s big enough and it also may use up some or all of the nil-rate band.
Inheritance Tax Rules For Married Couples
What is so important is making sure you have a Will. If you don’t have one, it could mean the deceased person’s assets do not pass on to those intended and it could mean unnecessary Inheritance Tax is paid.
Those who die, without having drafted a valid Will, are considered to have died ‘intestate’. In such cases, the distribution of assets becomes a legal minefield. Remember your Will is simply an instruction to your spouse or partner, on death, as to how you want your estate split up.
If you don’t decide the Revenue will make the decision for you.
A solicitor will help you to do this and you can also look out for Will Aid Month which takes place every November.
Inheritance Tax is a complex subject. We regularly work with solicitors as financial, tax and legal advice often go hand in hand. We work with our partners compliantly and professionally.
If you have any questions on Inheritance Tax please do get in touch with our team of Inheritance Tax specialists by emailing info@wwfp.net and to find out how we work with solicitors have a read here.