Juanita has contacted you following the death of her husband, Don. As the executor of his estate, she is seeking advice regarding the inheritance tax liability arising as a result of his death on shares which he owned.

Don:
– Died on 1 July 2016.
– Had always been UK resident and domiciled.
– Was married to Juanita, and they have one daughter, Lexi.

Lifetime gifts:
– Don made only two lifetime gifts.
– On 9 May 2011, Don gifted his overseas villa to Lexi.
– The villa was valued at £355,000 on 9 May 2011, and at £370,000 on 1 July 2016.
– On 1 March 2013, on the advice of a financial adviser, Don gifted 3,500 of his shares in Estar Ltd to Lexi.
– Prior to receiving this advice, Don had been planning to leave these shares to Lexi on his death.
– Under the terms of Don’s will, Don’s cousin will inherit the remaining 3,500 shares in Estar Ltd owned by Don at his death.

Estar Ltd:
– Is an investment company; no business property relief is available on the transfer of its shares.
– Before the gift on 1 March 2013, Don owned 7,000 ordinary shares in Estar Ltd.
– The remaining 3,000 ordinary shares issued by Estar Ltd are held by Juanita.
– The shares were valued as follows:

Required:
(a) Advise Juanita of the reduction in the inheritance tax liability arising on Don’s death in respect of the shares in Estar Ltd as a result of Lexi having received her shares as a lifetime gift, rather than on Don’s death. (8 marks)