IHT Nil Rate Band - Keep Your Hands On the Old Will

You may think that after an estate has been probated and the assets have passed to the surviving spouse or civil partner, that is the end of the matter and the paperwork (including the will) can be consigned to the shredder after a suitable period of time.

However, leaving aside the need to retain some documents (e.g. those which might have a tax impact if there is a subsequent query from the tax authorities), it is important to retain the will and the estate tax paperwork.

The reason for this is that the way Inheritance Tax (IHT) now works is to allow the beneficiaries of a surviving spouse or civil partner to make use of the ‘unused percentage’ of that person’s late partner’s IHT ‘nil rate band’, no matter when he or she died.

The way it works is as follows. Assume, for example, that a husband died and left a net estate of £50,000 at a time when the IHT nil rate band allowance was £150,000. That leaves two thirds of the IHT nil rate band unused. If his wife subsequently dies when the IHT nil rate band has risen to £200,000, her IHT nil rate band will be increased by two thirds of that amount (i.e. £133,333).

The newspapers have recently contained several stories concerning the estates of widows of men killed in the Second World War that have avoided substantial amounts of IHT because the original documentation relating to the husband’s estate in each case could be produced to justify a claim.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.