New rules introduced by the government enable a surviving spouse or civil partner to inherit ISA pots and continue to benefit from tax-free returns.
Previously, ISA savings were treated like any other aspect of estate and could be passed on to beneficiaries named in a Will but the tax advantages were not available after death.
Now, if a married ISA saver or one in a civil partnership dies, their partner can inherit the tax advantage based on the value of the ISA investments at the time of their death, providing the surviving spouse was living with the deceased at the time.
There are, however, differences between cash ISAs and stock and shares ISAs – it is necessary to inherit the stocks and shares ISAs if the spouse wants to keep the actual investments held by the deceased. This in effect means that they must inherit these assets from the deceased’s estate.
By way of example if on her death, Jean had £50,000.00 invested in cash ISAs then her husband, Fred, can invest that sum in a cash ISA (in addition to his own investment limit) provided that he does this within three years of Jean’s death or, if later, 180 days after the administration of Jean’s estate ends.
Executors acting in the administration of a deceased’s estate should notify the spouse or civil partner of the total value of the deceased’s ISA investments and should not sell ISA stocks and shares until the spouse has confirmed they do not want them.
Presently the rules have not been changed for unmarried couples who still cannot gain this tax benefit.
Wills, probate and finances are extremely complex areas of law but WHN’s specialist legal advisers are able to help in both the administrations of estates and helping prepare your finances for after you are gone.
For more information contact Helen Law on 01245 884253 or email helen.law@whnsolicitors.co.uk
