Since October 2007, a claim can now be made to transfer any unused Inheritance Tax nil rate band of the first spouse to die across to the estate of the survivor, thus potentially doubling the amount that passes to their beneficiaries tax free.
Whilst this new system may seem to have dramatically improved the position of married couples, Emma recommends caution and advises having correctly drawn up Wills with relevant tax planning measures to safeguard against the following possible scenarios:
- If the survivor re-marries leaving their estate to a new spouse. In this case the beneficiaries whom the first person wanted to benefit, which could include children of the marriage, may get nothing.
- The survivor may gift or spend money leaving less to the intended ultimate beneficiaries.
- The survivor may need long term care. Assets could then be taken to pay for such care.