Blanchards are experts in UK inheritance law. We have worked on tens of thousands of cases within the England and Wales and have dealt with every possible scenario. The UK’s inheritance law is relatively straight forward and is as follows. When there is a legally binding will, the estate is to be transferred to those listed in said will. However, when there is no will, it will be distributed to the spouse, then the children if there is no spouse, then the grandchildren if the children have passed away. If there is none of the above, then it is to be distributed to the deceased’s parents, and if the parents are deceased, then the siblings and their lines become entitled and so on. Within the UK there is an inheritance tax threshold of £325,000 with anything over that being taxed 40%. If the estate is below the value of £325,000 then you will not be subjected to inheritance tax. However, how does UK inheritance law compare to that of other countries?
French inheritance law
In France you are not free to distribute your estate how you wish. French inheritance law states that your children have an absolute right to inherit from your estate. This includes estates where there is a will. Children precede any and all heirs to an estate in France, even having entitlement alongside the deceased’s spouse, dissimilar to the UK’s inheritance laws. In cases of a spouse passing, their estate is to be divided among the spouse and any children of the deceased. Moreover, if there are no children but the deceased parents are still alive, the estate is to be split among the spouse and the parents of the deceased. The remaining French inheritance laws closely resemble UK inheritance laws. The only deviation is that in cases with no spouse of children, the parents will each receive a quarter of the estate with the remainder being divided by any siblings of said estate. When it comes to inheritance tax, the tax rate is determined by your relation to the deceased. This rate can fluctuate from 5% to 60%.
Spanish inheritance law
Similar to France, Spanish inheritance law orders that children are legal beneficiaries to an estate regardless of what a will states. However, wills are still a factor with Spanish inheritance even if children and spouses are present. It states that one-third of the estate can be distributed how you please, with the remaining two-thirds going to spouses and children. It is common for many residents of Spain to be nationals from other countries. Therefore, said residents must clearly state in their will if they wish to have their home countries inheritance laws or Spain’s inheritance laws. When it comes to inheritance tax in Spain, you have 6 months to declare the estate. After 6 months an additional 5% levy is applied every three months until the 20% marker is hit.
USA inheritance law
The inheritance laws in the U.S vary on each state. Unlike most countries, there are different laws on all facets of life depending on where you are in the states. In cases where there is no will, the estate is split between your surviving spouse and any children you may have from other relationships. When there is no surviving spouse, the estate passes to children, grandchildren, etc. Unless there are descendants, it goes back to parents, grandparents, siblings, aunts and uncles.
Inheritance tax is far more forgiving in the U.S than here in the UK. There is a tax free allowance of £38,515 if you inheriting from someone who is not a parent. However, if you are inheriting from a parent the threshold rises to a £3.5 million tax free allowance as long as you are an American citizen domiciled in the USA. Their tax rates are dependent on how much you inherit, ranging from 18% to 40%.
Irish Inheritance law
Irish inheritance law is similar to UK inheritance law with one large deviation. Their law states that in cases of intestacy, your spouse shall get two-thirds of your estate. The remaining one third is the divided equally among the deceased children. In instances where one of the children has passed, his or her inheritance is to then be passed on to their children. Irish inheritance tax is as follows, tax free allowance is £10,747 with this rising to £165,000 if inheriting from parents. This on the surface seems even more conservative than UK laws. However, the tax rate is lower at 33%.
Italian inheritance law
Italian inheritance laws are similar to other countries inheritance laws discussed. If there is a spouse and one child, the inheritance will be split 50/50 between both. However, if there were multiple children the spouse will receive one-third of the inheritance with the remaining two-thirds being split equally among the children. Moreover, if there was no children but the deceased was married and had siblings and ascendants, the spouse will inherit two-thirds of the estate while the remaining third will be divided up the family. Italian inheritance laws state there is no tax-free allowance when inheriting from more distant family members, including grandparents. Despite this, the tax rates are far lower than other countries listed here, at just 6%. Moreover, you will receive your inheritance tax free when inheriting from a parent, child or spouse. This is as long as the estate is under the Italian inheritance tax threshold of £714,000.
As you can see the inheritance laws greatly differ on the country. Not only in the way estates are distributed, but also from a tax perspective. Some being far more lenient with tax and others being very grudging, like the UK. For advice on estates and inheritance please contact us. For more articles like this, please read our other blogs and follow us on LinkedIn.