Are you a widow(er) with a nil-rate band legacy in your Will?

Following a recent Court decision, it is particularly important that you review your Will as a result of changes to the Inheritance Tax rules back in 2007.

Each person has a tax-free allowance of £325,000 (the nil-rate band). Widow(er)s may be eligible to an additional nil-rate band so that they may have a total tax-free allowance of up to £650,000.

Mrs Smith was a widow who had made a Will pre-2007 which left a legacy of her tax-free allowance to her children and grandchildren and the rest of her estate to charity, The Woodland Trust. Her executors and The Woodland Trust could not agree whether the legacy to her family was limited to her own nil-rate band or included her widow’s nil-rate band.

The High Court ruled in favour of the children and grandchildren. The charity appealed but lost in the Court of Appeal, where the Court decided that Mrs Smith intended to leave the maximum amount to her family without incurring tax.

Nick Palmer is a lawyer at Barker Gotelee, Solicitors in Ipswich.

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