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

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

Including the will of Uncle Dog

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

;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;