Martin Lewis reveals how you can save £200k in inheritance taxThe Martin Lewis Money Show
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00:00Any unused inheritance tax allowance passes on to your spouse.
00:04You don't need to do anything to activate it,
00:06although when you die the executors need to send the documents to HMRC.
00:09To be clear again, this is only if you are married or in a civil partnership.
00:14Living together doesn't count.
00:16Let me show you the impact. Big.
00:20Here we go.
00:22There you are, Mr. Youngerhart, Mrs. Youngerhart.
00:31And these are their inheritance tax allowances. They have one each.
00:34So look, everybody in their estate can give £325,000 and their inheritance tax is paid on it.
00:42Above that, you get another £175,000 if you're passing on your primary home to your direct descendants.
00:50So that's children or grandchildren, including stepchildren, foster children, adopted children.
00:55You pass that on, you get an extra £175,000 as long as your total estate isn't worth more than £2 million where it's gradually taken away.
01:01But we won't worry about that for the moment.
01:03So that is the situation. Now I have some very bad news, everyone.
01:07Mr. Youngerhart has passed away.
01:10But he leaves everything to his wife. There we go. All the money goes across.
01:15But because he has left everything to his wife, he has not used any of his inheritance tax allowances.
01:21And therefore she gets the inheritance tax allowances that he had.
01:26I've just seen your face. You're going, wow, for a couple. Yeah.
01:29Now we see the impact of this. Wait till you hear the maths.
01:31What? I forgot your name. I'm so sorry. Ben. Ben, wait till you hear the maths in a minute.
01:34Right. So now she can pass on £650,000 and another £350,000 if they've got the primary residence.
01:42That's a million pounds. Now let's just imagine they did exactly the same thing, that they weren't married.
01:47So you've got Mr. Youngerhart and Miss Doubt. Miss Doubt. There we go.
01:53In that same scenario, he's left everything to his partner. So he's used up his inheritance tax allowance.
01:59Now, if she leaves everything to the kids, she only has half of that.
02:03So that's £500,000. Going to be paying tax on it.
02:07Well, you know what? Depending on the tax, we could be talking £200,000 of inheritance tax paid because they weren't married.
02:15Have you got the ring yet?