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3. Inheritance tax Grace died on 20th November 2021. On death, her estate was as follows: Grace's husband Paul died in 2018 leaving his entire
3. Inheritance tax Grace died on 20th November 2021. On death, her estate was as follows: Grace's husband Paul died in 2018 leaving his entire estate to Grace. In October 2018, Grace gave 15,000 to her grandson and in May 2019 made a gift of 360,000 into a trust, with Grace paying any IHT liability on the gift. Grace made no other lifetime gifts. At the time of her death, Grace had outstanding household bills of 300 and the costs of her funeral amounted to 6,000. Grace's last will and testament leaves her entire estate to her daughter, Penny. a) Calculate the IHT liability arising on the gift in October 2018 and the value of the transfer. (2 marks) b) Calculate the IHT liability arising on the gift in May 2019 and the value of the transfer. (4 marks) c) Calculate the IHT nil rate band available and the IHT liability arising following Grace's death on each of her lifetime gifts and her estate on death. (10 marks) d) Penny has substantial wealth before inheriting her mother's estate. Prepare a note to advise any action that Penny can take to pass on her inheritance to her children in an IHT-efficient way. (4 marks)
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