INHERITANCE TAX
QUESTION 1
Frank has just died. His half interest in the matrimonial home passes to his wife by
survivorship. His will leaves everything else to his four children. His assets are set
out below.
Which of them are included in his estate for IHT purposes?
half interest in a house (owned jointly with his wife)
a holiday cottage (in his sole name)
a portfolio of quoted shares
a car
a bank account with a balance of £3,000
An insurance policy on his life the benefit of which he assigned to his children 2
years ago is not included in his estate for IHT.
The "estate" for IHT is everything to which the deceased was beneficially entitled at
the moment before death. At the moment before his death the deceased was
beneficially entitled to everything except the life policy, which he gave to his children
2 years earlier.
QUESTION 2
George dies leaving his family home worth £650,000 to his wife, his portfolio of
quoted shares worth £150,000 to his son with the residue of his estate to the
National Trust. He had made no lifetime transfers.
Is the following statement True or False?
No IHT is payable on George's death estate.
A. True
B. False
IHT is charged on the value of the death estate after deduction of exemptions and
reliefs. Everything passing to George's wife attracts the spouse exemption and
everything passing to the National Trust attracts the charity exemption. Thus, only
the assets passing to George's son are chargeable to IHT. George had made no
lifetime transfers, so he died with a cumulative total of zero. The assets passing to
his son are taxed at 0%.
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QUESTION 1
Frank has just died. His half interest in the matrimonial home passes to his wife by
survivorship. His will leaves everything else to his four children. His assets are set
out below.
Which of them are included in his estate for IHT purposes?
half interest in a house (owned jointly with his wife)
a holiday cottage (in his sole name)
a portfolio of quoted shares
a car
a bank account with a balance of £3,000
An insurance policy on his life the benefit of which he assigned to his children 2
years ago is not included in his estate for IHT.
The "estate" for IHT is everything to which the deceased was beneficially entitled at
the moment before death. At the moment before his death the deceased was
beneficially entitled to everything except the life policy, which he gave to his children
2 years earlier.
QUESTION 2
George dies leaving his family home worth £650,000 to his wife, his portfolio of
quoted shares worth £150,000 to his son with the residue of his estate to the
National Trust. He had made no lifetime transfers.
Is the following statement True or False?
No IHT is payable on George's death estate.
A. True
B. False
IHT is charged on the value of the death estate after deduction of exemptions and
reliefs. Everything passing to George's wife attracts the spouse exemption and
everything passing to the National Trust attracts the charity exemption. Thus, only
the assets passing to George's son are chargeable to IHT. George had made no
lifetime transfers, so he died with a cumulative total of zero. The assets passing to
his son are taxed at 0%.
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