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Mr Dog's Estate: It is in the IHT "Black hole"

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  • SeniorSam
    SeniorSam Posts: 1,673 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    edited 3 June 2009 at 5:26PM
    Hi Sam,
    I did try to get my head round the concept of trusts in 2007 but then Gordon B went and changed the rules.
    Also by accident my father created an interest in possession trust in 1967 by dropping dead intestate at the age of 50 ish. Long term that bit of tax planning worked out very well, though it was a nightmare of debt at the time. Thank goodness I managed to talk my late mother out of the solicitor's "good" advice about what we call Deeds of Variation these days.

    It is still OK is it to lend money at zero interest? I have in the back of my mind that the taxman does not like that trick of passing money down generations?

    I was thinking of helping my children so that their infant children's trust(s) end up owning part of the house their parents are living in?
    Would something like that be tax efficient?

    John.

    I was once accused by my daughter's solicitor of "acting behind the curtain" - I believe a reference to the role of the mother when China had an under age little Emperor - the most notorious one, decorated the park in Beijing with a pleasure junk carved out of solid marble so she and her friends could enjoy a tea ceremony aboard.
    I could advise, but if she thought I had been able to control a self willed teenager - she was barking up the wrong tree. :D


    ............... Hi again John,



    Nothing wrong with the Deed of Variation advice as this could have changed matters and with appropriate Trusts, may have worked out well.

    But not sure if you were aware of this fact, but when the rules changed regarding 'interest in possession' trusts, there was a period in which the beneficiary of that interest could opt out of their right and pass the trust on to the remaindermen and so avoid the possibility of the value of IIP THAT estate falling into their own estate should they die with the interest.

    Such action would be deemed as a Potentially Exempt Transfer (PET.... nothing to do with your Dog!) As such the value of the trust remains in the estate of the interest beneficiary for 7 years

    If you were not advised about this then a larger amount of inheritance tax may be payable if the 'interest beneficiary' dies and the exempt period to make this change has now passed by..

    Several cases where the exempt period was used for the Trust to be moved on and 'just in case' of a death within 7 years, a term assurance for the potential 40%v of the trust value protected the potential increased liability.

    Good strategy for those in the know ......... which solicitors should be if they are offering IHT advice. Dont forget that there is a 2 year winow from the date of dearth to change by Deed of Variation if agreed by beneficiaries.

    Hope this helps

    Sam
    I'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, but my comments here and on Legal Beagles as Sam101 are just meant to be helpful. Do ask questions from the Members who are here to help.
  • John_Pierpoint
    John_Pierpoint Posts: 8,401 Forumite
    Part of the Furniture 1,000 Posts
    edited 11 September 2011 at 1:58PM
    By accident my father created an interest in possession trust in 1967 by dropping dead intestate at the age of 50 ish. Long term that bit of tax planning worked out very well, though it was a nightmare of debt at the time. Thank goodness I managed to talk my late mother out of the solicitor's "good" advice about what we call Deeds of Variation these days.
    SeniorSam wrote: »
    ............... Hi again John,
    Nothing wrong with the Dead of Variation advice as this could have changed matters and with appropriate Trusts, may have worked out well.

    But not sure if you were aware of this fact, but when the rules changed regarding 'interest in possession' trusts, there was a period in which the beneficiary of that interest could opt out of their right and pass the trust on to the remaindermen and so avoid the possibility of the value of IIP THAT estate falling into their own estate should they die with the interest.

    Such action would be deemed as a Potentially Exempt Transfer (PET.... nothing to do with your Dog!) As such the value of the trust remains in the estate of the interest beneficiary for 7 years

    If you were not advised about this then a larger amount of inheritance tax may be payable if the 'interest beneficiary' dies and the exempt period to make this change has now passed by..

    Several cases where the exempt period was used for the Trust to be moved on and 'just in case' of a death within 7 years, a term assurance for the potential 40%v of the trust value protected the potential increased liability.

    Good strategy for those in the know......... which solicitors should be if they are offering IHT advice.

    Hope this helps

    Sam

    Hi Sam,

    I think it is a complete nonsense that the government is spending about half our money on our behalf and so has to create a huge poacher and gamekeeper industry of some of this country's finest brains. One lot trying to extract the maximum amount of tax and the other lot trying to dodge penal taxation.
    Both lots could go and do something productive.

    Don't worry about about the interest in possession stuff, it came to an end some 6 years ago..
    Basically back in 1967 mum and her children ended up with a house under the intestacy rules. Mum's half share was a life interest (Interest in Possession trust).
    Mum's position was that if dad had bothered to make a will, he would have left it all to her - which might well have been true but that is not what he did.
    The tax system's logic, in so far as anything is logical in the tax system, seemed to take the position that as the house had paid "death duties" on the first death, it did not need to pay again on the second death.

    My idea is that perhaps I can do something similar via the home (yet to be purchased) of my (yet to be born) grandchild. So a decision on Uncle Dog's bequest is not yet urgent.;)

    In the meantime I've now got a busy time liquidating Uncle Dog's assets; number one of which is his creaking doggy old house (Sorry wonderful detached renovation opportunity.).:D

    John
  • SeniorSam
    SeniorSam Posts: 1,673 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Good luck with that John. Whn the time is right, there are plenty of people out there who may know just what you need to do, but be careful that you 'check it out' as I have seen many wills and tax plans that are complete rubbish.

    Sam
    I'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, but my comments here and on Legal Beagles as Sam101 are just meant to be helpful. Do ask questions from the Members who are here to help.
  • John_Pierpoint
    John_Pierpoint Posts: 8,401 Forumite
    Part of the Furniture 1,000 Posts
    edited 11 September 2011 at 1:57PM
    Including the will of Uncle Dog

    http://forums.moneysavingexpert.com/...html?t=1164505

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