<p>Case Study</p>Tax

Case Study

Tax

No death taxes - home, studio and business preserved for spouse and child

We were contacted by an artist whose husband had recently died.  The couple had Wills in place, leaving everything to the survivor.  They owned a valuable house (including the artist's studio), the artist's business (which was run as a partnership between the artist and her husband) and some modest savings.   The artist was in her late 70s, beginning to suffer mobility problems and needing more support with day to day life.  Her daughter was thinking of ways in which her family and her mother could live together going forward.

The husband's Will was simple and tax efficient.  It gave everything to his artist wife, with no inheritance tax to pay because it qualified for the spouse exemption.  However, it did not anticipate the daughter's position or her future inheritance.  Leaving the Will unchanged, the daughter would face a 40% inheritance tax bill on everything on her mother's death.

We were able to advise on what was involved in the probate process and how that would affect the artist's work and business.  We applied to the Land Registry to divide ownership of the house retrospectively following the husband's death and then re-wrote ('varied') the husband's Will so that half the house and studio could be left to the daughter as at the date of his death.  We were also able to introduce the daughter as a partner of the business to ensure that she received income and half her inheritance early – with no payment of any tax.  She, her mother and her family are now happily installed on the south coast and her mother is looking forward to a retrospective as she enters her 80th year in 2021.