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bigduckontax, Accountant
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My father died in August 1986 intestate. The IHT threshold

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My father died in August 1986 intestate. The IHT threshold at that time was £71,000.
His net estate was £110,000.
Please confirm what the distribution rules were at that time - my belief was that my mother (who died recently) would have been entitled to the first £40,000 and the remainder would be split 50% in trust for my mother with a life interest in the income only and the remaining 50% of the residue passing to the three sons (of which I am one).
I need this information to complete IHT402 for my mothere's estate and to establish how much of my father's IHT threshold can be transferred to my mother i.e value of childrens share £35k divided by £71k multiplied by £325k = £161k approx.

Hello, I'm Keith and happy to help you with your question. I kicked off wrongly and am working on it. Inheritance tax (IHT) was introduced in 1986.

Under the intestacy rules then in force your Mother would be entitled to a 75K legacy and a life interest in half of the remainder, the balance being held in trust for the children.
Inter spousal transfer inflate the IHT limit so 71K + 75K = 116K, 5K over the estate, thus no IHT was due on decease. Your Father's threshold remains intact and can be passed on to your Mother. Thus she has an inflated IHT threshold of 325K + 71K = 396K before IHT kicks in on the surplus at a flat rate of 40%, 36% if 10% or more of her estate was willed to charitable purposes.
I do hope i have shed some light on your question. If you are really struggling with the IHT102 any local solicitor could complete it for you in a jiffy providing you cna supply full data and it should not cost an arm and a leg in fees.
Customer: replied 2 years ago.

Checked info with firm of chartered accountants.

They indicate IHT relief to be transferred to mum's is circa £35k/£71k x £325k =£161K.

So added to £325K = £486k.

And from whence does the 35K come?
Customer: replied 2 years ago.

£35k is the only bit of the intestate sum of £110k estate that was not passed absolutely to my mum. In fact 50% of the residue was in trust for her so the only amount that actually passed was £17.5k. Therefore only £17.5k of the £110k was non spousal transfer.

Could therefore expect IHT relief transfer to be £71k-£17.5k/£71k x £325k = £240k approx = £565k.

Your Father died intestate so your mother would have a life interest only in half of the remainder. From whence does the 50% of the residue in trust for her come? Intestate succession passes the residue ultimately to the children.
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