Inheritance Tax Article MoneySavingExpert.com Discussion

margaretclare

hilspars wrote:

My father now has a bee in his bonnet about inheritance tax, especially as he and my mother cannot agree about their financial future.
He is 72 and wants to join an action group or lobby against inheritance tax. Any ideas?

Waste of time and effort.

I would suggest that he and your mother each sort out their own 'financial future'. That's what my DH and I do, and it has worked out well so far (we're 70 and 71 respectively).

Margaret Clare

cheerfulcat

hilspars wrote:

My father now has a bee in his bonnet about inheritance tax, especially as he and my mother cannot agree about their financial future.
He is 72 and wants to join an action group or lobby against inheritance tax. Any ideas?

Yep - he can join the Taxpayers' Alliance

nutter

Hi

My Nan past away last week, she had £60K in savings. In her will the money is split between both her Son's. When they went to see the Solicitor today she said that the money will be added onto my dads wages so he will pay 40% tax on it. Could anyone confirm if this is correct.

Thank you for any help.

Nutter

Chrismaths

No this is poo poo.

PS. I'm sure there has to be some misunderstanding between lawyer and client here. If your Nan's estate was worth less than £285000, then there is no tax on anyone. If it was more than this, the excess attracts IHT at 40% of the excess, payable by the executors of the will prior to paying it out to the beneficiaries (the two sons). Their income has nothing to do with it, it is not liable to income tax.

stuezo

Only just visited the IHT site for the first time - would add a couple of pointers:

Annie is right re the inaccuracy on the official IHT part of the website: The discretionary Will Trust (DWT) still works perfectly well (without having to distribute to 18 year olds).

People who are property rich and cash poor can still utilise DWTs using an extra bit of paperwork (very easy to set up & very cost effective).

DWTs can still (currently) be utilised even if one partner has died intestate or with an IHT ineffective will (a particular specialism of 90%+ of solicitors I have encountered - BE VERY CAREFUL DURING "FREE WILL WEEK" (May not be as free as it appears if its not written correctly for IHT): Typically this can be avoided by you telling the solicitor that you need an IHT will (as opposed to simply saying that you want a will and then expecting to receive advice). I should add the the other 10% of solicitors (typically those who specialise in Trusts & Estates (very often members of STEPs (Society of Trusts & Estate Practitioners) are very good.

The recent Trust changes made will not effect most people (other than adding an extra layer of paperwork) as badly (or at all) as the press has made out. (ie currently only an issue if more than £285000 is paid into it, and the oft quoted 20% charge is then only applied to the amount above the £285,000. (For most people, passing 2 x £285,000 into a discretionary trust will go a heck of a long way to avoiding IHT).

An additional route for some people (although not the majority) is to consider AIM & EIS investments which fall out of the estate after 2 years - but unlike Discounted Gift Schemes (which I also like) - allow the individual to have access to the money in the future should they need it.

EIS schemes also allow Capital Gains to be deferred (could be useful for people with buy to lets who are looking to sell as they near retirement (they also give income tax relief). VERY IMPORTANT to consider companies who are focussed on protecting your capital and performing as a standalone investment - rather than a cracking tax scheme where you may lose your money due to performance/ management.

Stuart

Robert_Sterling

vonnie26 wrote:

:j Has any one every done this "tenants in kind" whereby you donate half you house to one son or daughter and the other half to the other.

The technical terms here are "Tenants in Common" and "Joint Tenants".

Tenants in Common basically own half shares each in a property.
Whereas Joint Tenants jointly own the whole of the property until one of them dies and then the survivor owns the whole of the property.

So with Joint Tenants the first to die does not leave their share to their partner or to anyone else as it automatically becomes the property of the partner.


Recently many couples who owned their house as Joint Tenants have changed to being Tenants in Common. They do this to take advantage of Two Nil Rate Bands each of £285,000 ( Total £570,000 ) of Inheritance Tax.

i.e.

They can pass on £570,000 without paying IHT.

Being TIC rather than JT can save £114,000 of IHT.

THis has so far been classified as TAX AVOIDANCE which is OK rather than TAX EVASION which is not OK.

The new legislation does not, in my opinion, attack this particular avoidance but what do I know ... See disclaimer which follows.

This is not legal advice.
This is not financial advice.
I know nothing.
Check it out yourself.
See what other posters have to say.

hiraethcottage

I wonder if someone could advise me with regard to the yearly amount of £3,000 that can be gifted to children free of IHT. My parents are both in the eighties and have substantial savings. My Dad believes that the £3,000 is the total amount that BOTH parents can gift. As my parents are taxed seperately surely this sum should be £6,000 in any one year. Can anyone clarify this? Many thanks.

THFC

I have read all of these articles and need help with the following. We are planning my daughters financial well being. If anything happens to either of us parents, the other is financially taken care of, a relief.

BUT -

If it happened that we both die (unlikely but possible) We have a guardian who will look after our daughter. We are young parents and insurance is quite cheap and our daughter is only 2.

We have a life insurance policy which would pay out £200K
and the house too would be paid - worth £170K
Other payments from my work around £50K

So i gather the estate is worth £420K and would be taxed around £54K at today's rate.

I want to avoid any tax if possible but cannot see how to.

Ideally i want the house kept for my daughter in a trust, and the guardian to receive the rest 250K in some form of trust to help them provide for my daughter over what maybe 20 years.

Tiggs_2

hiraethcottage wrote:

My Dad believes that the £3,000 is the total amount that BOTH parents can gift. As my parents are taxed seperately surely this sum should be £6,000 in any one year. Can anyone clarify this? Many thanks.

your dad is wrong...its £3k per person (however...he's 80 so show some respect and pretend he's right )

toepazz

Please, has anyone had experience of Online Will Writers to cover any/all these eventualities. I made a tentative enquiry and now they keep ringing to ask if I'm ready to draw up a document over the phone - seems an odd way of producing a legal document to me, or is that just because I'm an old pharttt?