Young widow, inherited inheritance tax allowance

[Softnatural]

DH died leaving me a young widow. There was no tax to pay on his estate becuase it largely comprised of our shared house, which passed to me outside of his estate and pension assets which were exempt.

It does however leave me with quite a high net worth (and hopefully a lifetime to use it, so there might be nothing left!)

I understand my own estate can use his inheritance tax allowance which, if it included property, essentially means up to £1m tax free, but is this indefinite? I might not die for another 50 years! Also, what happens if I remarry? No plans to, in fact quite the opposite to protect my DC's interests, but just curious.

Sorry for your loss but you really need a solicitor specialised in this kind of thing

Why would I need a solicitor involved? His estate was very simple and I'm just having some initial thoughts about what happens next. A solicitor isn't going to change the process.

I'm really sorry for your loss. Agree with PPs that you will want to consult a solicitor about this, but I think the answer is 1) yes you can transfer his unused basic threshold indefinitely, and 2) if you remarry, you'll consult a solicitor then about how to make your will, since any previous will is invalidated by the new marriage. This link is helpful: https://www.harrowells.co.uk/site/blog/inheritance-blog/can-i-use-3-nil-rate-bands-in-my-inheritance-tax-planning#:~:text=So%20it%20is%20important%20to,potentially%20up%20to%20%C2%A3130%2C000).
So you probably don't need a solicitor now, but you'll want advice if you remarry.

The truth is that no one really knows as no one knows what the law will be on Inheritance Tax at the time you die.

You've broadly described how it works now - but I would say it's certain that the law will change at some point in the next 50 years, and it could be to almost anything.

Probably the best thing to do is to take advice and make a will under current law and keep it under review when there are major changes.

A solicitor is key. They will record your wishes, witness and sign your will, and store your will safely should you lose your copy or your beneficiaries not be able to find it amongst your belongings.

it’s not for your dh’s estate- as you say that’s simple, has passed to you. It’s to ensure your estate is distributed as you wish.

if your children are very young you may want to make sure the money is ringfenced, eg put in trust, so their guardians can use it to care for them, but can’t piss it up against the wall or misappropriate it.

you’ll also want to nominate legal guardians for your dc.

a will is a legal document. You can get it done with a form from WHSmith and a couple of mates as witnesses but with all you have at stake best to get it sewn up properly.

No one knows what future governments will do with inheritance tax, some of these 'generous' rules could disappear.

I believe you could change who inherits and maybe get some of his wealth (less than the tax free amount obviously) passed directly to your DCs, maybe in trust. If it's not too late (not sure how long you have to attempt to do this) and if you don't mind reducing your wealth. This would definitely need a solicitor.

You can do probate yourself, particularly if it's straightforward.

Why? What would a solicitor have done for me? I filled in a form to have his name taken off the house deeds and the pension companies sent me the money due to me. What would a solicitor have done?

The solicitor would be for your own will, OP, to make sure that it's clear who will be looking after your children if you die while they're still young, and who will manage their inheritance. But this may already be covered by your existing will - my DP and I have made those provisions already and they won't need to change unless the surviving partner remarries.

I'm puzzled by the insistence on the need for a solicitor here. It sounds like the OP's husband's estate was pretty simple to deal with. Who knows what the inheritance tax laws will be in a year's time let alone 50 years! Some solicitors are good but none can see the future.

If making a will then yes a solicitor should advise. And it would need to be redone on remarriage.

I'm sorry for your loss OP.

I was the executor of my aunt's estate a few years ago. She had lost her husband thirty years earlier and his allowance hadn't been used as it all passed (under the terms of his will) to my aunty. Her estate was above the individual threshold but below the couple threshold. I was able to use my uncle's allowance against my aunt's estate. I had to provide his death certificate as part of my submission.

I'm very sorry for your loss.

I think the point PPs are making relates to your comment about 'high net worth'.

Administering the estate of your late husband was straightforward and, as you say, did not require any legal advice/assistance. However if you have enough, including the house, to be concerned about IHT then, to my mind, you need professional advice. That might come from a solicitor or perhaps an IFA.

The rules allowing up to £1m where residential property is concerned seem simple until you're applying them on the ground. We found this when my Mum died as there were conflicts between what IHT exemptions required and my sister's wishes on her own IHT mitigation.

Obviously, if you're currently in good health 'young' etc it's not likely to be an issue for many years to come. OTOH anybody can be stricken with life limiting or ending illness at any time. Never mind the everyday risks of accidents.

That's the bit that's too complicated to deal with on a forum.

1. Yes, it is indefinite
2. If you remarry and your new husband dies before you without using any of his IHT nil-rate band, you will have three lots of nil-rate band to use. However, if you die first and leave everything to him, he won't get any benefit from your late husband's nil-rate band since a transfer between spouses is free of IHT and he can't use your late husband's nil-rate band when he dies. As others have said, remarrying will invalidate any existing will.

The government can, of course, change the rules at any time.

Children are adults and my will splits everything between them. Even if they were children, the will would be very straightforward and nothing's changed since his death.

Again why? I inherited a house and some pensions. They have significant value, but it's not complicated.

Children are adults and my will splits everything between them. Even if they were children, the will would be very straightforward and nothing's changed since his death.

Okay, so it's just if you remarry, that you'll want to make provisions in your new will to make sure your children benefit from your late husband's IHT threshold. You'd do that (I think) by making sure that you leave your children a named sum that at least uses up the IHT threshold, even if you're leaving the rest of your estate to your new husband, and that's what you'll get a solicitor to help with at that time. But there's no need to do anything now except to keep a record of the fact that your husband didn't use his IHT threshold so your executors will be transferring it.

Fwiw, I don't actually object to payment of inheritance tax. If DC stand to inherit £1m+ between them I think there should be some tax paid on it. I'm just interested in what the position might be, it's unlikely I'll take steps to avoid it.

Yeah, my DM has a similar attitude - we're all broadly pro-taxation though we don't necessarily want to pay loads more than we have to. One thing she does, which you might consider if you think your DC would benefit now, is to use up her annual tax-exempt gifting allowance of £3000 by making an annual gift to her DC.

So sorry for your loss.

An accountant that advises on IHT would be able to help you to determine the position you are currently in and the amount of allowances you will.inherit from your husband. It might be that they recommend a valuation at date of death to establish these. Sometimes it's easier to work them out now than when a lot of water has gone under the bridge.

However, that's not to say the rules won't change. David Cameron brought in the transfer of allowances to a married spouse and the main residence allowance is even newer. They could change at any point the Government chooses.

Have a read of this https://www.gov.uk/guidance/transferring-unused-basic-threshold-for-inheritance-tax

Be aware that whilst this is the current position, it isn't set in stone and the law may be changed in the future.