Tradefair & Financials
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Married couples ?
I'm aware that on the death of one, their Inheritance Tax allowance of c£300K transfers to the remaining spouse.
But, is the one who dies still able to make bequests to third parties in their will ? Or would this annul the right of the remaining partner to 'inherit' their IHT allowance ? In other words does the spouse who dies have to leave ALL their estate to their partner, in order to pass on their IHT allowance ?
I'm aware that on the death of one, their Inheritance Tax allowance of c£300K transfers to the remaining spouse.
But, is the one who dies still able to make bequests to third parties in their will ? Or would this annul the right of the remaining partner to 'inherit' their IHT allowance ? In other words does the spouse who dies have to leave ALL their estate to their partner, in order to pass on their IHT allowance ?
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no but it uses up the allowance to transfer over up to the value of the beqeathment
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Vopte Conservative they are going to abolish it!
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IHT threshold is £325k and according to the pre-budget statement will not rise for tax year 2010/11
You should still consider the use of trusts if you have children you wish to leave them some of your estate. If you leave your estate solely to your partner your wishes may not be carried out if, for instance, they fall out with the children, or remarry. |
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madsimon is correct, that it is the "unused allowance" which transfers over to the surviving spouse and therefore, depending on how the estate devolves, the full IHT threshold may not transfer if all assets are not passed to the spouse.
As for the use of trusts, it is worth noting that they have become much more inefficient from an income tax perspective (depending on the source of income) and given the admin costs of running small trusts which do not incur immediate IHT charges, the government has pretty much accomplished its goal of making them a lot less useful than they used to be! |