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bigduckontax, Accountant
Category: Tax
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Back in Sept 2015, my wife received £45,000 from a trust in

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Back in Sept 2015, my wife received £45,000 from a trust in the Isle of man. Th e trust was set up as a hardship fund and was only paid out at the discretion of the trustees. My wife's mum was contacted by the trust as they wished to close it down and distribute the proceeds to the relatives of the person who set up the trust. At the time she said she didn't need the money and could her share be passed onto her daughter (my wife). My wife's mother has since died (2010) and we have gone through probate. No Inheritance Tax was due as the estate was less than £325,000. If the trust monies had been paid to my wife's mother before she died and assuming she hadn't spent it, the £45,000 would have been included in her estate and would have pushed its value slightly over the £325K threshold and inheritance tax would have been payable. Could you please advise me of my wife's tax position. Thank you.
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Your wife did not receive any moneys from the trust therefore she has no liability to UK taxation. If she did indeed receive something it is in the nature of a gift to her by her mother and thus outside the scope of UK taxation. The 325K Inheritance Tax (IHT) is inflated by any charitable, inter spousal and certain other bequests [eg to political parties] so it is possible that this level might not have, in fact, been breached. Any assets over the limit are taxable at 40% flat rate, 36% if 10% or more of the estate is bequeathed to charities. I do hope that your fins my answer useful.
Customer: replied 1 year ago.
But she did receive money from the trust - £45,000 as per my first sentence.
Expert:  bigduckontax replied 1 year ago.
I did cover this in the second paragraph of my reply.
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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