The broad inheritance tax position is that any assets left to a spouse are free of inheritance tax. In addition each person is able to leave the "nil rate band" (currently £325,000) without paying inheritance tax. Since October 2007, any unused nil rate band on the first death can be "transferred" to the surviving spouse on his or her death, effectively doubling the tax free allowance.
However transferring this is not always a straightforward process. Ed Cursham, Partner and Head of Wills and Probate at Fraser Brown Solicitors, explains why and what can be done to help things run more smoothly.
"The Inland Revenue will not just transfer the nil rate band in the event of the second death without enquiry or proof. If the second nil rate band is to be claimed, a form needs completing with various pieces of information about the marriage and the financial circumstances of the first spouse.
"Details required include the date and place of marriage, the value of the estate of the first spouse to die, details of their will and copies of any grant of probate or letters of administration, as well as other information such as details of legacies and assets and any gifts made by the first spouse.
"Although it may seem like straightforward information, this is not always easy to find. While it is usually possible to acquire a copy of a marriage certificate, it may be harder to fulfil other requirements, such as the value of any gifts made by the first spouse to die in the seven years prior to his or her death.
"Other anomalies can also occur, for example when the deceased has been married more than once. Therefore you should keep all records of marriage certificates and details of the estate of the first spouse to die. Keep them with the will of the surviving spouse so they are immediately available in the event of their death."
For further information and advice regarding wealth management please contact Ed Cursham on 0115 9471 512 or email firstname.lastname@example.org.