Estate Duty surviving spouse exemption: application on death
Broadly, the exemption applies if Estate Duty was paid, or was deemed to have been paid, (IHTM04452) on the death of the first of the spouses to die. Then, provided that all the necessary criteria are met (for example, that the property continued to be settled property (IHTM04456) and that the surviving spouse was not competant to dispose (IHTM04457) of it), the trust property is left out of account (IHTM04331) on the death of the surviving spouse or on the termination of their interest in possession in it, IHTA84/SCH6/PARA2.
The exemption cannot apply if the death of the first spouse occurred after 12 March1975, as the unlimited spouse exemption under Capital Transfer Tax would have been due.
Nor can it apply if the death of the first spouse occurred between 13 November 1974and 12 March 1975 as the Estate Duty spouse exemption was unlimited for this period.
The exemption may be restricted if duty was not paid (IHTM04453) on certain types of asset.
Husband dies in 1973 and by Will leaves property to his wife for life, with remainder to their children.
On the assumption that his wife has no power to use the capital of the trust fund (IHTM04457) as she thinks fit, it will normally be left out of account in determining the estate chargeable to IHT on her death.