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  • FIRST POST
    • Cardew
    • By Cardew 20th Mar 17, 5:14 PM
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    Cardew
    Disposal of assets to Spouse
    • #1
    • 20th Mar 17, 5:14 PM
    Disposal of assets to Spouse 20th Mar 17 at 5:14 PM
    Can I seek advice on the following please.

    A friend’s wife (in her 70’s) has a terminal illness with weeks/months to live. She has been happily married for 40+ years – with adult children. Both have recently made out wills(through solicitor) leaving everything to the surviving spouse, who will be the executor.

    The reason for the new wills was because their old wills had a Trust arrangement(for surviving spouse and children) to ensure they received double the IHT allowance. This is not now necessary and a Trust would prevent the new arrangement for IHT exemption that comes into force next month i.e. if proceeds of house go to children, the allowance is £850k(rising to £1 million).

    Her older husband is not very good on financial matters and is distraught about his wife’s illness. She has asked me, in confidence, to find out the implications of transferring most of her assets to her husband before she dies.

    Her assets are:

    Joint ownership with husband(no mortgage) of a house worth around £700k.

    £100k in cash ISAs. £40k in Premium Bonds. £10k in 65+ National Savings Bond, £25k in savings and shares worth around £35k.

    The only reason I have been asked for advice is that I pointed out the new arrangement for IHT introduced in April. That apparently makes me an expert – which I ain’t; or I wouldn’t seek advice on MSE.

    The intent is that their solicitor will handle probate.

    A. I have told her that as far as I am aware, leaving aside the house, there is no restriction in passing assets between husband and wife. The ISA’s and Premium Bonds would have to be cashed in before transfer. The effect of this would simply reduce the size of her estate for probate and reduce solicitor’s charges.

    B. I have no idea on transfer of property! Cost implications etc


    Advice please.
Page 1
    • Yorkshireman99
    • By Yorkshireman99 20th Mar 17, 6:07 PM
    • 2,807 Posts
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    Yorkshireman99
    • #2
    • 20th Mar 17, 6:07 PM
    • #2
    • 20th Mar 17, 6:07 PM
    Can I seek advice on the following please.

    A friend’s wife (in her 70’s) has a terminal illness with weeks/months to live. She has been happily married for 40+ years – with adult children. Both have recently made out wills(through solicitor) leaving everything to the surviving spouse, who will be the executor.

    The reason for the new wills was because their old wills had a Trust arrangement(for surviving spouse and children) to ensure they received double the IHT allowance. This is not now necessary and a Trust would prevent the new arrangement for IHT exemption that comes into force next month i.e. if proceeds of house go to children, the allowance is £850k(rising to £1 million).

    Her older husband is not very good on financial matters and is distraught about his wife’s illness. She has asked me, in confidence, to find out the implications of transferring most of her assets to her husband before she dies.

    Her assets are:

    Joint ownership with husband(no mortgage) of a house worth around £700k.

    £100k in cash ISAs. £40k in Premium Bonds. £10k in 65+ National Savings Bond, £25k in savings and shares worth around £35k.

    The only reason I have been asked for advice is that I pointed out the new arrangement for IHT introduced in April. That apparently makes me an expert – which I ain’t; or I wouldn’t seek advice on MSE.

    The intent is that their solicitor will handle probate.

    A. I have told her that as far as I am aware, leaving aside the house, there is no restriction in passing assets between husband and wife. The ISA’s and Premium Bonds would have to be cashed in before transfer. The effect of this would simply reduce the size of her estate for probate and reduce solicitor’s charges.

    B. I have no idea on transfer of property! Cost implications etc


    Advice please.
    Originally posted by Cardew
    There should be no need to transfer funds betrween spouses as it will not affect any IHT liability. As far as the costs for getting the estate dealt with it should be possible to negotiate so the solictor only charges for work done rather than as a percentage of the estate value. With a bit of help the husband should be ablke to do most of the work himself.
    • Keep pedalling
    • By Keep pedalling 20th Mar 17, 6:46 PM
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    Keep pedalling
    • #3
    • 20th Mar 17, 6:46 PM
    • #3
    • 20th Mar 17, 6:46 PM
    Are their adult children still around? Ideally they should also be executors to take the load off their father. Unless there has been a falling out it would also be helpful to set up a LPA so they can help him manage his finances.
    • zagfles
    • By zagfles 20th Mar 17, 7:03 PM
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    zagfles
    • #4
    • 20th Mar 17, 7:03 PM
    • #4
    • 20th Mar 17, 7:03 PM
    Also the ISA allowance can be inherited, so cashing it in before death would lose the tax benefits. See here for Nationwide's explaination: http://www.nationwide.co.uk/support/support-articles/manage-your-account/isa-inheritance/isa-inheritance-about
    • greenbee
    • By greenbee 20th Mar 17, 7:09 PM
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    greenbee
    • #5
    • 20th Mar 17, 7:09 PM
    • #5
    • 20th Mar 17, 7:09 PM
    Having just gone through this (my dad died in November, and I'm just about to complete probate with everything going to my mum), I agree that the children should be included as executors.

    The estate does not look particularly complicated, and with everything going to the surviving spouse, the children may prefer to deal with it themselves. Solicitors will charge an hourly rate (I was quoted 15 hours @ £200/hour), plus disbursements (fees, the cost of an accountant to complete the IHT paperwork) and many also charge a percentage of the value of the estate (I was quoted 1.5% which in this case would be j£8.5k...).

    Bearing in mind that there is a lot in the probate forms that only family can fill in (e.g. blood/half blood relatives), it may actually be easier for the children to complete these themselves.

    I'd advise whoever is registering the death to get plenty of certificates (I got 10 I think) and also to get a solicitor to certify a few copies of the will (some places need them), and to use the 'Tell us once' service. Contact with the institutions holding the investments doesn't need to happen immediately (in fact most will need a copy of the sealed grant of probate, although NS&I don't appear to even though their website says they do). Sadly there are no standard processes or paperwork and many of them are pretty poor at managing the process if they don't have a dedicated bereavement team.

    My dad's estate wasn't dissimilar (although he's managed to do quite a good job of spending some of his investments once he got his diagnosis!), and it certainly took me less than the 15 hours that the solicitor estimated - including completing the IHT paperwork.
    • zagfles
    • By zagfles 20th Mar 17, 7:26 PM
    • 12,115 Posts
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    zagfles
    • #6
    • 20th Mar 17, 7:26 PM
    • #6
    • 20th Mar 17, 7:26 PM
    Having just gone through this (my dad died in November, and I'm just about to complete probate with everything going to my mum), I agree that the children should be included as executors.

    The estate does not look particularly complicated, and with everything going to the surviving spouse, the children may prefer to deal with it themselves. Solicitors will charge an hourly rate (I was quoted 15 hours @ £200/hour), plus disbursements (fees, the cost of an accountant to complete the IHT paperwork) and many also charge a percentage of the value of the estate (I was quoted 1.5% which in this case would be j£8.5k...).

    Bearing in mind that there is a lot in the probate forms that only family can fill in (e.g. blood/half blood relatives), it may actually be easier for the children to complete these themselves.

    I'd advise whoever is registering the death to get plenty of certificates (I got 10 I think) and also to get a solicitor to certify a few copies of the will (some places need them), and to use the 'Tell us once' service. Contact with the institutions holding the investments doesn't need to happen immediately (in fact most will need a copy of the sealed grant of probate, although NS&I don't appear to even though their website says they do). Sadly there are no standard processes or paperwork and many of them are pretty poor at managing the process if they don't have a dedicated bereavement team.

    My dad's estate wasn't dissimilar (although he's managed to do quite a good job of spending some of his investments once he got his diagnosis!), and it certainly took me less than the 15 hours that the solicitor estimated - including completing the IHT paperwork.
    Originally posted by greenbee
    Yes I've helped with probate a couple of times - was straightforwards and quick - got them both sorted well within 3 months. A solicitor is likely to take much longer, since they'll have to do things by the book like check whether the deceased had any debts, I think you're supposed to put adverts in papers asking anyone with a claim on the estate to contact them. If you know the deceased's financial affairs and are certain they didn't have any debts you don't know about, then you don't need to bother with this.
    • Cardew
    • By Cardew 20th Mar 17, 11:35 PM
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    Cardew
    • #7
    • 20th Mar 17, 11:35 PM
    • #7
    • 20th Mar 17, 11:35 PM
    The estate does not look particularly complicated, and with everything going to the surviving spouse, the children may prefer to deal with it themselves. Solicitors will charge an hourly rate (I was quoted 15 hours @ £200/hour), plus disbursements (fees, the cost of an accountant to complete the IHT paperwork) and many also charge a percentage of the value of the estate (I was quoted 1.5% which in this case would be j£8.5k...).
    Originally posted by greenbee
    Thanks for the advice in posts above.

    Whilst the children are very close(not geographically!) and supportive of both parents, the lady does not want the children to be executors, they will be on the death of her husband.

    The wife is very practical and has prepared a complete list of all her assets, which will be £210k plus share of the house(say £350k).

    If her share of the house is included, at 1.5% + VAT? that would mean an £8.4k bill - £10k with VAT. Her object in seeking advice, on the feasibility of disposal of assets, was to reduce that liability.

    The husband has indicated to me that any money he gets from his wife will be gifted immediately to his children and hopes he will live at least 3 years, and preferably 7 years.
    • getmore4less
    • By getmore4less 21st Mar 17, 6:24 AM
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    getmore4less
    • #8
    • 21st Mar 17, 6:24 AM
    • #8
    • 21st Mar 17, 6:24 AM
    Thanks for the advice in posts above.

    Whilst the children are very close(not geographically!) and supportive of both parents, the lady does not want the children to be executors, they will be on the death of her husband.

    The wife is very practical and has prepared a complete list of all her assets, which will be £210k plus share of the house(say £350k).

    If her share of the house is included, at 1.5% + VAT? that would mean an £8.4k bill - £10k with VAT. Her object in seeking advice, on the feasibility of disposal of assets, was to reduce that liability.

    The husband has indicated to me that any money he gets from his wife will be gifted immediately to his children and hopes he will live at least 3 years, and preferably 7 years.
    Originally posted by Cardew
    3 years won't make any difference(unless he gifts over £650k) will need the full 7 years for the gifts to drop off his estate.

    If the hubby is executor he can negotiate the charge to have a solicitor manage the estate and not pay a %.

    is th house joint tenants or tenants in common.


    The new residential nil rate band is transferable so could have been used on second death if not used on the first.
    • Cardew
    • By Cardew 21st Mar 17, 9:42 AM
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    Cardew
    • #9
    • 21st Mar 17, 9:42 AM
    • #9
    • 21st Mar 17, 9:42 AM
    3 years won't make any difference(unless he gifts over £650k) will need the full 7 years for the gifts to drop off his estate.
    Originally posted by getmore4less
    Why won't 3 years make any difference?

    https://www.gov.uk/inheritance-tax/gifts
    The 7 year rule

    If there’s Inheritance Tax to pay, it’s charged at 40% on gifts given in the 3 years before you die.
    Gifts made 3 to 7 years before your death are taxed on a sliding scale known as ‘taper relief’.
    Years between gift and death Tax paid
    less than 3 40%
    3 to 4 32%
    4 to 5 24%
    5 to 6 16%
    6 to 7 8%
    7 or more 0%
    Also in 3 years the Nil rate band will be £1million in his case.

    https://www.gov.uk/guidance/inheritance-tax-residence-nil-rate-band
    Last edited by Cardew; 21-03-2017 at 11:00 AM.
    • getmore4less
    • By getmore4less 21st Mar 17, 11:38 AM
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    getmore4less
    the KEY bit of that is....

    If there’s Inheritance Tax to pay,

    gifts under the nil rate band don't pay tax so no taper relief

    Gifts don't get to use the residential nil rate band so the max for gifts will be £650k.
    • zagfles
    • By zagfles 21st Mar 17, 11:56 AM
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    zagfles
    the KEY bit of that is....

    If there’s Inheritance Tax to pay,

    gifts under the nil rate band don't pay tax so no taper relief

    Gifts don't get to use the residential nil rate band so the max for gifts will be £650k.
    Originally posted by getmore4less
    Yes this is a common misunderstanding. The gift uses the nil rate band first, so unless the gifts exceed the nil rate band, there is no taper. See http://www.scottishwidows.co.uk/Extranet/Literature/Doc/FP0320

    http://www.telegraph.co.uk/finance/personalfinance/tax/11937233/The-14-year-inheritance-tax-rule-youve-never-heard-of.html
    • Cardew
    • By Cardew 21st Mar 17, 5:25 PM
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    Cardew
    Thanks for the above. I knew she shouldn't have asked my advice!
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