RNRB and 2nd marriage

lkpflk11
lkpflk11 Online Community Member Posts: 1 Listener
edited September 26 in Money and bills

Both myself and my wife have children from a previous marriage. We own a house as tenants in common. House worth £350k. If i pass away, would my £175k share, be exempt from IHT, if passed to my children. This would be in addition to £325k in cash. Also, would house have to be sold immediately?

Comments

  • Zipz
    Zipz Online Community Member Posts: 3,690 Championing
    edited September 26

    Hi @lkpflk11

    You and your wife need to see a STEP solicitor and make wills.

    As I understand it, your estate is worth £500K. The £175K interest in the property is IHT exempt because you're leaving it to direct descendants assuming it is your sole residence. £325K is the maximum you can leave without paying IHT.

    Whether the house would have to be sold immediately depends upon the owners post-probate unless there is a trust protecting your wife's right to live there for the rest of her life, remarriage, or residential care.

    Trusts are tricky. Don't attempt a DIY trust. Avoid "Will Writers" like the plague.

    You need a STEP solicitor.

    You might find some expert lay people on this forum:

    https://forums.moneysavingexpert.com/categories/deaths-funerals-probate

    However, I should think their advice would be the same as you've received here. The trust must be absolutely right for the surviving partner in the marriage.

  • MW123
    MW123 Scope Member Posts: 1,512 Championing

    @lkpflk11

    Firstly I would like to say welcome to the community.

    Regarding your question. If you pass away, your estate includes your half of the house (£175,000) plus £325,000 in cash, totalling £500,000. You likely will not pay inheritance tax if your children or grandchildren inherit your share, because you are entitled to a £325,000 tax-free allowance known as the standard nil-rate band, and an additional £175,000 tax-free allowance called the residence nil-rate band, which applies when your home is passed to direct descendants.

    Because you own the house as tenants in common, your share goes to whoever you name in your will. It does not automatically go to your wife. The house does not have to be sold immediately unless your will or the co-owners decide otherwise.

    To keep things fair, many blended families use a property trust will or life interest trust. This allows your wife to live in the house for life (or until she chooses to leave), while ensuring your children or grandchildren inherit your share later. These trusts can be tailored to your family’s needs. You should speak with a solicitor experienced in wills and trusts to get it set up properly.

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