Inheritance tax: Who went first?

By | 21 December 2020

For married couples (or civil partners), when one spouse dies their estate is administered in accordance with their will (if valid), or under the law of intestacy. Any inheritance tax (IHT) liability will be calculated accordingly.

Simultaneous deaths

What happens if both spouses died in circumstances where it is not known which of them passed away first? The general law (in England and Wales) provides that where two or more people have died and it is unclear if one of them survived the other, they are normally presumed to have died in order of seniority, i.e. the younger is deemed to have survived the elder (LPA 1925, s 184). This is often referred to as the ‘commorientes’ rule.

For IHT purposes, without a relieving provision the potential effect of the commorientes rule could be double (or multiple) IHT charges on such deaths (although ‘quick succession relief’ might be available). The IHT legislation therefore provides that where it cannot be known which of two or more deceased persons survived the other(s) they shall be assumed to have died at the same instant (IHTA 1984, ss 4(2), 54(4)) (note: this article only focuses on simultaneous deaths in England and Wales).

Whether or not spouses died simultaneously (or one survived the other) can sometimes lead to disputes between legatees who are affected by the answer.

Did one spouse survive the other?

For example, in Scarle James Deceased, the Estate of v Scarle Marjorie Deceased, the Estate of [2019] EWHC 2224 (Ch), an elderly couple (Mr and Mrs S) died of hypothermia in their jointly-owned home in Essex in October 2016, although their bodies were not found until around a week later. Mr and Mrs S had no children together, but each had offspring from previous marriages.

Mr S was the elder of the couple. If he died first, his share of the matrimonial home (and his share of funds in a joint bank account) would have passed to Mrs S; on her death, the property would have passed to her children. However, if Mrs S died first, the property would have passed to Mr S, and on his death shortly afterwards to his daughter. If it was not possible to establish which of them died first, under the commerientes rule Mrs S would be deemed to have survived Mr S.

The High Court considered the facts and evidence and concluded that it could not be inferred that one spouse had survived the other. Accordingly, the presumption of death in LPA 1925, s 184 applied, so Mrs S was presumed to have survived Mr S.

Practical point

Scarle was not an IHT case. However, the interaction of general law and tax law can have interesting results (e.g. see the HM Revenue and Customs Inheritance Tax manual at IHTM12197). In practice, spouses are less likely to die simultaneously than a short time after each other; consideration may then be given to the inclusion of ‘survivorship clauses’ in wills, and the potential IHT implications (e.g. see IHTA 1984, s 92). In all cases, expert professional advice is recommended.

The above article was first published in Business Tax Insider (December 2019) (www.taxinsider.co.uk).