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F E Smith
F E Smith, Advocate
Category: Law
Satisfied Customers: 9338
Experience:  I have been practising for 30 years.
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If I will my half of our estate to my wife, I assume that no

Resolved Question:

If I will my half of our estate to my wife, I assume that no IHT is paid at that time.
Can my wife now sell assets and spend the money bringing herself below the combined IHT of 650,000 or is the IHT on my half of our estate simply deferred and must be paid once assets are sold and then reclaimed by my wife if perchance she outlives me by 7 years.
Submitted: 10 months ago.
Category: Law
Expert:  F E Smith replied 10 months ago.

If your question is whether, by transferring everything to your wife, you lose your own £325,000 exemption, the answer is no.

Can I clarify anything for you?

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Best wishes.

FES.

Customer: replied 10 months ago.
I understand that I don't lose my IHT, but this was not my question. The transfer to my wife is free of IHT at the point of my death. Had we died simultaneously IHT would have been paid on the excess over 650,000, eg. in a car accident.My question is whether on not a surviving wife is now allowed to reduce her assets so that she is below the IHT threshold when she dies, or is there a deferred IHT tax to be paid on the value of the assets transferred to her at my death. For example, she immediately may want to sell our 1,000,000+ marital home and move to a smaller property. i.e. at my death she receive 500,000+ in asset value via the marital home in addition to other assets owned by me but now willed to her.
Expert:  F E Smith replied 10 months ago.

Depends how your wife reduces her assets. If she gives it away, they are potentially exempt transfers.

If she gambles it goes on round the world trips, then there is no liability.

If she sells her million pound home, and moves to a smaller property, then she will have a chunk of cash which would be treated in exactly the same way as the asset would.

I’m still not certain what it is that you’re asking

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