It is fairly unusual for a husband and wife to die in quick succession in the normal course of events, but this is sadly more commonplace during the coronavirus pandemic. Legally speaking, a number of interesting points arise in this situation, much beloved of those who set law school exams, but less frequently found in real life.
The Will of the first to die may or may not include a survivorship clause in the bequest to the surviving spouse, usually saying something along the lines of “I leave the residue of my estate to my husband/wife, subject to him/her surviving me by 30 days”.
The pros and cons of including survivorship clauses are a topic for a lengthy blog post in themselves (there’s a useful article entitled “Survivorship clauses in Wills and when to avoid them” on the website of the Society of Will Writers, for anyone who’s interested and has had their technical weetabix this morning). Suffice to say that a survivorship clause will still be found in many Wills, particularly those drafted prior to October 2007 when the transferable nil rate band for inheritance tax purposes was introduced, although nowadays they are not used as routinely as they used to be.
Survivorship clauses are used to avoid the estate of the first spouse to die passing through probate twice in quick succession, as well as to give the first to die greater control over who receives their assets.
The Commorientes Rule and Inheritance Tax on a double death
If a married couple dies together with Wills leaving everything to each other but without a survivorship clause, this creates an interesting result.
Where two people die together in circumstances where it cannot be determined which of them died first, for example in an accident, under the ‘commorientes rule’ in section 184 Law of Property Act 1925, there is a legal presumption that the elder of the two died first.
However, in contrast, for inheritance tax purposes two people can die simultaneously, under s. 4(2) of the Inheritance Tax Act 1984, which sets out that,”where it cannot be known which of two or more persons who have died survived the other or others they shall be assumed to have died at the same instant“.
Therefore, for succession purposes, the elder spouse is treated as having died first, whereas for inheritance tax purposes, the two spouses died simultaneously. The upshot is that the estate belonging to the first to die will escape inheritance tax, because for inheritance tax purposes the couple died simultaneously, so the older spouses’s estate did not increase the value of the younger spouses’s estate.
Quick Succession Relief for Inheritance Tax Purposes
Quick Succession Relief for inheritance tax purposes may also apply where a husband and wife die in quick succession. This tax relief is intended to mitigate the tax payable where the same assets would otherwise be subject to inheritance tax twice, if the second death takes place within 5 years of the first.
Quick succession relief allows a proportion of the inheritance tax paid on the first death to be credited against the inheritance tax paid on the second death. If the second death occurs within one year, then the proportion is 100%, and this reduces to 20% if the second death takes place within 5 years of the first.
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