Stan is a widower, and dies on 30th December 2020. His wife died 3 years earlier leaving all her estate to him. Stan’s estate is worth £1.6m, and comprises his home valued at £500k, £100k cash and a holiday accommodation business worth £1000,000.
Hilda is a widow, and, coincidentally, she dies on the same day, 30th December 2020. Her husband also died 3 years ago and left all his estate to her. Hilda’s estate is worth £1.6m, and almost identical to Stan’s in its component parts – ie, her home is valued at £500k, she has £100k cash and a holiday accommodation business worth £1000,000.
Hilda’s executors owe HMRC nothing and her beneficiaries get the full £1.6m, but Stan’s executors have to pay £240k in Inheritance Tax, so his beneficiaries receive ‘just’ £1.36m.
Contact me, if you want to find out how you can minimise your IHT liability and avoid disappointing your beneficiaries!