Judge rules out £112,000 death tax bill as more forced to pay

proportion of estates liable for the duty rising every year since 2009.

The increase was driven through a combination of rising property prices and the £325,000 tax-free allowance remaining frozen since Gordon Brown was prime minister.

However, Mrs Alston’s children managed to avoid her estate becoming part of the shocking statistics.

The issue began in 2010 when, after her husband’s death, on the advice of her solicitor, Mrs Alston ring-fenced £250,000 that would pass directly to her children tax-free when she died.

In 2012, Mrs Alston was in need of some extra income and applied to draw some money from the trust, first seeking advice from her solicitor and another tax expert on whether that would affect the trust’s tax position.

She was wrongly informed that the tax protections would remain in place, and accidentally triggered a tax trap that only became apparent after her death.

Everything in the trust subsequently fell into Mrs Alston’s estate, undermining years of careful planning, the court heard.

However, the judge ruled that, as the mistake was not negligent on Mrs Share price Total return (2019) Alston’s part, it was fair to overrule the changes made to the trust fund and the resulting bill.

In her ruling, Master Julia Clarke said the family “was not careless” and had “asked the right questions of the right person, but got the wrong answer”. She added: “It would be unconscionable to leave the mistake uncorrected.”

Rachael Griffin of Quilter, a wealth firm, said relentless tweaking of IHT rules made them incomprehensible.

“In this case, professionals took a misstep and the result was a punishing tax bill,” she said. “It is promising that the courts are pragmatic about the complexity of the tax system and people get a fair hearing if they have the means to get in front of a judge to argue their case.”