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A query was raised regarding whether a nephew could apply Group III reductions when inheriting from an aunt-in-law following the death of the biological aunt. The DGT ruled that affinity-based kinship is extinguished upon the dissolution of the marriage, meaning the heir is considered a stranger for tax purposes.
This ruling limits inheritance tax benefits for relatives-in-law, as the legal link of affinity ceases to exist upon the death of the spouse, preventing the application of preferential tax rates reserved for blood relatives.
The tax team reviews your specific situation.
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