To ask about inheritance tax and other issues?

[shylatte]

I'm very fortunate that no first degree relative has died so have no experience of inheriting. Many times on MN I've seen posters chime in with "beware of IHT" if an OP mentions that their parents paid for a holiday/extension/icecream.

So how does it work? What even is the threshold? If someone dies does a forensic accountant go through their bank account for the last seven years to see who they paid/gifted? Or does the solicitor rely on people coming forward to declare things?

Perhaps selfishly I want to minimize what my children would have to pay in terms of IHT (although I'm not a homeowner so it might not even apply?) so are there ways around this? On here I have seen something about £3.5k allowance every year?

www.gov.uk/inheritance-tax/gifts

Perhaps speak to an independent financial advisor who can give proper advice about this too. Things like ‘life insurance in trust’ and the like are useful products to be aware of.

Remember a couple bits from college
When someone passes away, everything they owned is their 'estate'. The threshold is £325,000 I think, and if the 'estate' is worth more than that, inheritance tax is due.
I think you can give away £3,500 per year and it is not subject to inheritance tax. Bigger amounts might be depending on how long ago you gave it away.
Agree with previous poster - financial advisor.

Thank you both for the replies. If its £325k then I don't have much to worry about 😬