IHT Implications - Rules of Intestacy
One of our clients sadly passed away leaving a wife and two minor children. He hadn't made a will. Now I believe I'm correct that under rules of intestacy the wife will get the chattels, £250,000 and half the residue. The other half being left for the children. I'm thinking the IHT implications will be as follows:
Wife's Legacy
- life interest created for the spouse's half residue and is treated as an immediate post death interest
- qualifying IIP so exempt from deceased's estate but will form part of the wife's estate
- she will be fully entitled to any income the trust creates during her life
Children's Legacy
- the residue will be put into a bereaved minors trust since they are under 18
- the residue is chargeable to IHT in the deceased's estate (no exemption)
- at 18 they become absolutely entitled to trust property
- no IHT charges on the trust (exit charges and the like)
In both circumstances we will need to complete Trust returns to account for any untaxed income.
Is there anything that I'm missing out as IHT is not my strongest subject.
.