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Inheritance Tax Made Simple by Andrew Komarnyckyj

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3.7 Redirecting to spouse/civil partner

It occasionally happens that an individual who is married or in a civil partnership will leave part of his estate to the surviving spouse or CP, and part of his estate to his children. The result can be an immediate charge to inheritance tax if the share of the estate left to the children exceeds the individual’s nil-rate band. This charge to inheritance tax could be eliminated by the judicious use of a deed of variation.

Example

Joe dies, leaving an estate valued at £2.5 million.

He gives £1,250,000 of this to his wife Mary, and the remaining £1,250,000 to his daughter Kate.

The £1,250,000 given to Mary is tax-free, as Mary has the benefit of the spouse exemption.

The £1,250,000 given to Kate ...

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