Newsletter Spring 2006

Spring 2006 Newsletter

Content

U-Turns Galore

Premises, Promises

Filing Bonus

RIP: 0% Rate

His and Hers

Party Spirit

State Of The Union

VAT's The Point?

Going Dutch

Away Win For Revenue

WIP-Round

The Best Land Plans

Tax Free Gizmos

Where Theres A Will

Do You Work Here?

Out Of The Shadows

Sacrifice Works

Home Sweet Office

Sauce For The Goose

Blissful Ignorance

PC Or Not PC?

Lost On Penalties

Worth The Paper

Carry The Can

Where Theres A Will

It's often difficult to discuss inheritance tax (IHT) planning with people, because it involves thinking about death, and people often don't like to do that. But if you are drawing up a will, you are already there, so you would hope that most wills would take IHT into account. A will that does so can save a great deal of tax, and can also save a great deal of argument and confusion - which is the last thing you want when trying to sort out a family member's estate.

In a recent case, the husband's will left his share of the matrimonial home to a trust, and said that the trustees had "absolute discretion" to decide whether his widow could live in it. She continued to occupy the house until she died a few years later.

The Revenue then argued that the will had given her the right to live there. If that was so, the whole value of the property would be in her estate on her death, rather than just the half that she owned herself. Her personal representatives argued that she didn't have such a right under the will - the trustees could choose whether to allow her to live there or not. In fact, if she owned the other half share of the house, she could live in it on account of her own legal rights anyway.

The appeal Commissioner said that the wording of the will wasn't very clear, but it didn't appear to give the widow any rights. The trustees could decide. So the husband's half of the house wasn't charged to IHT on the second death.

It's useful to review wills from time to time and make sure they still reflect what you want to happen, and they still make sense for tax purposes. It's also useful to make sure that they are as clear as possible, to avoid arguments with the taxman - and with the relatives! If you want to discuss the contents of your will, please contact us.