What happens when there is not enough money to satisfy legacies and devise? C I Howells reports
One of the most common tasks for any private client solicitor is to advise a testator who wishes to provide for: (i) his wife or partner; and (ii) his children, or other beneficiaries. Everyone wishes to pay as little inheritance tax (IHT) as possible.
For the purposes of this article, I shall assume that the particular case is one where the total estate is likely to exceed the “nil-rate band” (NRB), currently £300,000: see the Finance Act 2005, s 98. Past experience indicates that the figure is subject to annual increase.
Probably the commonest solution is for the will to provide for the children or other beneficiaries to be given “the maximum amount of cash which I can give without incurring any liability to Inheritance Tax” (or similar words), ie the NRB, and for the wife or partner to be given the residuary estate—probably including the testator’s estate or interest in the matrimonial or quasi-matrimonial home.
A gift by will to one’s spouse will normally be
