Inheritance Tax Trust

My father just died. Its main asset was his house valued at about £ 500k. He left the lifetime use of the house to his wife. However, if it wants to sell the house, she receives one third of the product with the remaining two thirds to go equally to his four children and one grandchild. What are the inheritance to pay and when it is payable?

There are no rights of inheritance tax between husband and wife. If the house was left in part to her and partly to his children and grandchildren, the party was left to his children and grandchildren would have attracted the estate tax at his death.

But what you say about a life interest, he may have been put in a trust. There would have to pay the gift tax when it was put into the trust with a tail of seven years which means that no inheritance tax to pay now if it was done seven years ago, but trust will pay capital gains when the house is sold. If this was done this way, tenants need to have paid a market rent to the trust or gift is not valid so I hope this has been done correctly. It is a nightmare scenario where a "gift with reservation" is not valid for the inheritance tax, but still attracts capital gains because the tenant does not pay rent. So you pay two types of taxes!

The only other possible scenario is that the house is entirely his own, but that's what she agreed to do with your father. Then, the house will be hers to sell and can give your share of proceeds from the sale. There will be no taxation of capital gains, as it will be selling their principal residence and there will be no inheritance tax, if it survives to donate money for seven years.