James died on 22 January 2015. He had made the following gifts during his lifetime:

(1) On 9 October 2007, a cash gift of £35,000 to a trust. No lifetime inheritance tax was payable in respect of this gift.

(2) On 14 May 2013, a cash gift of £420,000 to his daughter.

(3) On 2 August 2013, a gift of a property valued at £260,000 to a trust. No lifetime inheritance tax was payable in respect of this gift because it was covered by the nil rate band. By the time of James’ death on 22 January 2015, the property had increased in value to £310,000.

On 22 January 2015, James’ estate was valued at £870,000. Under the terms of his will, James left his entire estate to his children.

The nil rate band of James’ wife was fully utilised when she died ten years ago.

The nil rate band for the tax year 2007–08 is £300,000, and for the tax year 2013–14 it is £325,000.

Required:
(b) Explain why it might have been beneficial for inheritance tax purposes if James had left a portion of his estate to his grandchildren rather than to his children. (2 marks)