We acted in an estate where Mr C's assets totalled £700,000, but his wife had died before Mr C and had left her estate to him. This meant we could claim 2 nil rate band allowances, totalling £650,000, to reduce his estate to £50,000 for IHT purposes. However, Mr C had also made large gifts in the preceding 7 years, including paying premiums on life insurance policies, which exceeded the annual exemption of £3,000. These would have been added to his estate thus increasing the amount subject to IHT from £50,000 to £150,000. This would have increased the IHT bill by £40,000. However, we advised the family that these payments had been made regularly, and after analysing Mr C's bank statements for the 7 year period, we were satisifed that gifts had all been made out of disposable income. The family agreed that he had intended to make these gifts regularly, and having checked My C's papers he clearly intended to make these gifts from his disposable income. We therefore claimed IHT relief when accounting to HMRC and successfully claimed the reduction in IHT of £40,000.
We acted for the children of Mrs C who inherited the family home. The home had great development potential, and had risen considerably in value in the 12 month period after her death. The demand for the property meant that it sold for £110,600 more than its value for probate. Having agreed the date of death value with the district valuer for IHT purposes, the gain in value since death would have been subject to CGT at 28%. After transferring interest to the children before selling, it was possible to make use of their CGT annual allowances, their losses, and their lower tax rates (18%), and also the non-resident status of one of the children, to avoid incurring any Capital Gains Tax liability. This saved the family CGT of about £28,000.
Mr M died leaving a will which provided for his £1 million estate to be held in trust to pay an income to his girlfriend for her lifetime, but with the capital fund held in trust to be paid to 3 charities on her death. This meant that tax of £270,000 would have been due. Within 2 years of Mr M's death, we advised all the benificiaries that we could avoid this IHT by varying the inheritance so that the girlfriend's interest was changed from a right to income to a capital sum which was within the £325,000 nil rate band allowance. The inheritance that was then payable to the charities was exempt for IHT so that no inheritance tax was due.