4.3. Spousal Exemptions
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Can anyone explain the above? How are they able to gift part of the estate to their children tax free? I thought spousal exemption means you can give to the spouse tax free not children…
In this context, the spouse exemption is enacted by the law, to transfer estate to children.
Ultimately Wills need to transfer to kids - spousal is always free however transfer to kids have exemption limits in this case £312k.
so when Will dies -> transfer £312k to kids tax free -> next when mrs Will dies, do the remaining; so ultimate tax base will become £700-£624k = £76k -> so if 20%, the tax=£15.2k
vs
Will dies - tax free to Mrs -> Mrs dies, tax base=£700-312k=£388k which triggers a tax bill of £77.6k
So what does this have anything to do with spousal exemption? Isn’t it just a gift exemption in general?
It’s just saying spousal exemptions could blind you from taking adv of inheritance exemption, which in this case is better
ahh, thanks!