IHT Warning

toptastic

I dont think there is anything we can do about this (any suggestions gratefully received!) so I thought I would post this as a warning.

My father died in 1997 leaving an estate of about £600k. Rather than let his IHT allowance pass unused we took some professional advice and my sister and I agreed to a deed of variation on his will that passed us around £100k each and the rest to our mum (I assume when the allowance was around £200k at the time). His will originally gave everything to her.

Mum passed away a couple of weeks ago.

Because Dad passed money to us on his death using 100% of his allowance, this means we cannot roll his IHT allowance over to mums estate meaning we are facing a big IHT bill

If, as his will decreed, all the estate was left to mum, and she chose to gift us £100k each on the point of his death then we would still have a tax free IHT allowance of £624k to play with (the £100k gifts were made over 7 years ago so would now be exempt) instead of the £312k we are now allowed.

Bad luck? Or very harsh?

Either way, be warned!

jaynes2326

Bad luck to you - sorry. I take it you have checked with a solicitor about IHT mitigation? I don't think there is anything you can do though.

wakeupalarm

With hindsight, it's easy to say you could of done this or that but the rules on transfer of allowance only changed in 2007. So the course of action you took at the time of your fathers death previously was the correct decision to take.

toptastic

No arguments - as I was saying we are resigned to the fact we will be hit with a bill but it seems a bit harsh that we lose out by being prudent.

If we had stuck our heads in the sand at the time of my fathers death it would have worked out better for us.

Hindsight eh??!!

localhero

You were unlucky. Along with the many others who invested good money in tax efficient Wills. Perversely, the winners in most cases are those who sat on their hands and did nothing.

Most people were taken by surprise by the 'Osborne budget'. Informed sources have suggested that this had been devised long ago by Gordon Brown and kept in his back pocket as a pre-election sweetener. He then of course subsequently changed his mind about calling an election - perhaps something he may live to regret.