Thomas was married to Kim, until her death in March 2008. The couple had two sons, Bill
Question:
Thomas was married to Kim, until her death in March 2008. The couple had two sons, Bill and Ben. Kim had never made any lifetime gifts but in her will she left her two sons £100,000 each and the balance of her estate was inherited by Thomas.
Thomas died on 22 June 2019. He made the following gifts during his lifetime:
£ | ||
12 June 2008 | Cash as a wedding gift to Bill | 14,000 |
23 March 2010 | Cash gift to a trust | 334,000 |
14 July 2012 | Further cash gift to the trust | 100,000 |
10 May 2013 | Cash gift to niece | 8,000 |
Thomas paid any lifetime inheritance tax due on the above lifetime gifts.
At the time of his death, Thomas owned the following assets:
- 100,000 £1 ordinary shares in Hospice plc, a quoted trading company. Hospice plc’s shares were valued at 242.5p to 250.5p for that day.
- The family home, valued at £1,200,000
- Bank and cash balances of £150,000
- A life insurance policy, which provided proceeds of £88,000 to his estate on his death.
Thomas’ only outstanding debts were his funeral expenses of £6,500.
Under the terms of his will, Thomas left £200 to each of his two god- children, a £10,000 donation to OXFAM (a UK charity) and the residue of his estate was left equally to his children.
YOU ARE REQUIRED TO:
1. Calculate the amounts of inheritance tax which would have been paid on the lifetime gifts, stating the due dates where relevant, and explaining the treatment of each gift made during Thomas’ life.
2. Calculate the amount of inheritance tax which becomes payable as a result of Thomas’ death, stating the due dates for payment of the inheritance tax and by whom the inheritance tax is payable.
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain