Reducing IHT liability
When someone dies, Inheritance Tax (IHT) may be payable if the estate is over the IHT threshold. This can be a burden for the family and one which can be avoided with legitimate and straightforward estate planning.
We acted for a family when the husband died and under the will he had left everything to his children. His estate was over the inheritance threshold and so there would be tax to pay. His wife was still alive but he had not left anything to her (and so spouse exemption would not apply). They jointly owned a property (as tenants in common) which means that they each held a half share.
We prepared a Deed of Variation to vary the husband’s will so it read as if he put his half share of the property into a life interest trust. This means that the wife could live there during her lifetime and then upon her death it would pass to the children.
As a result of the estate planning we did, there was no inheritance tax to pay on the half share of the property that went into the trust as spouse exemption could be applied to this. The value of the remainder of the estate was below the inheritance tax threshold and so the clients did not have to pay any inheritance tax at all.