Inheritance Tax Planning

Shinds

dunstonh - What could be my options...?

My parents are 50 and they have a house worth about 500k and about 100k in savings + my dad's Ford Fiesta (which he LOVES)

Would it be possible to just transfer the House into my name before they get alot older in age.. if you get me..?

I've also heard stuff about people setting up trust funds so their children don't get hit by IHT - is there anything you could advise on this..?

Thanks.

donsaini

my brother & his wife lives with my mum & dad. my parents house is worth £400k. it has a £3k interest only mortgage on it. my dad has an endowment that matures in about 4 years. dad is 60yrs in august.

dad also needs £80k for a business venture.

as my brother plans to live with my parents, they are either thinking of gifting him the house, and him giving them £110k afterwards via remortgage....however they realise this may leave with tax still pay on the gift with reservation rule

or they may sell it to him for £110k, but would this also look dodgy as could the IR still call it a gift.

the 3rd option they have thought is for dad to gift/sell my brother hi half of the house, then my mum will leave him the other half, keeping it well below the IHT threshold. however this will mean having to pay stamp duty twice?
from what i have read on these boards if they go for option 3 and split the bills, then gifts of reservation shouldnt arise?

parents also have assets of about another £350k between them to share between myself and brother

anybody confirm what i'm thinking, or give any better options

thanks

al
:beer: :beer:

Bossyboots

I think you parents need to go and see a solicitor or accountant and get some proper inheritance tax planning advice. The figures you are talking about are way too high for them to consider tackling the issues themselves or taking advice from people on an internet forum.

savvy

Hi Donsaini
Hope you don't mind, have moved your thread here to keep the same topic together for you and future users.

thanks
savvy

GeoffS_4

I read somewhere that a Discounted Gift Trust can be used to reduce IHT by 50%. Is this correct?
How does it work?
What is the approx cost to set up?
Can it be added to over time?
Is there a minimum deposit amount?

Also, about 3 years ago my father in law put some of his money in a National Savings Bond and he made my wife a joint account holder with himself. Am I correct in assuming that putting such an account in joint names will not reduce any IHT liability?

GeoffS_4

Thanks very much for the reply.
You say savings are best kept in individual accounts not joint, why is this?
I assume that savings put in joint names with a child are still subject to IHT for 100% of the value, not 50%, unless 7 years has expired since taking out the savings?

deepdiver_3

I am fed up with 'professional people' trying to rip me off! Recently I had Nat West visit me and recommend my wife and I draw up wills containing discretionary trusts. It was excellent advice and the fee would have been £175 for both of us. I thought this was reasonable until I read the small print in which the Nat West Bank acted as executor! When I looked at their charges for executing a will it was 4% on the first £250,000, 2% on the next £750,00 and then 1% thereafter - this a monumental rip off - £10,000 for the first £250,000. I am just as highly qualified as their solicitors, with more than one degree, but in a different field and my salary is closer to £30,000 per annum. I know I would not be paying the bill personally if dead, but I consider these charges to be grossly excessive and would like to draw up our own wills. I have carried out conveyancing and other legal work after suitable research, which was very simple and I have absolutely no trust in the parasites that pray on people in the 'financial' fields, while attempting to frighten us because of our complex tax laws. I would appreciate knowing where I can research the correct formats for drawing up discretionary trusts if anyone can help.

KD

Robert_Sterling wrote:

Where it is possible to do so I would always advocate that the family look after their parents in their old age. At first sight it looks as if your father could have paid his two daughters more than about a £1000 pounds each a month to look after him in his old age. The two daughters could use some of the money to "buy in" assistance with that task.

With regard to the above post , if a elderly parent gives a child money each month to look after them would it be considered as taxable income by IR.

I have given up my job, moved 400 miles to 'look after' my parents. Sadly my dad died very suddenly and my mum's particularly grateful that I've moved -she's partially sighted. She wants to give me something as she feels I've made a real sacrifice for her. Frankly it's my pleasure after the rat race of London.

Personally I don't need any money- but I read somewhere on the thread about, that there was a little used tax rule (can't remember it's name) where a person could give a regular payment to someone (as long as money paid out of income not capital) and I thought this might be an option to help keep my mum's estate below IHT thresholds, as property prices where she is are rising rapidly (against trend).

If we set up this - would this be considered as taxable income for me by IR? Is there a 'limit' that the IR would see as reasonable/unreasonable?

IHT is going round and round in my head - stressing me out a bit. any help gratefully received.

Cardew

deepdiver wrote:

I am fed up with 'professional people' trying to rip me off! Recently I had Nat West visit me and recommend my wife and I draw up wills containing discretionary trusts. It was excellent advice and the fee would have been £175 for both of us. I thought this was reasonable until I read the small print in which the Nat West Bank acted as executor! When I looked at their charges for executing a will it was 4% on the first £250,000, 2% on the next £750,00 and then 1% thereafter - this a monumental rip off - £10,000 for the first £250,000. I am just as highly qualified as their solicitors, with more than one degree, but in a different field and my salary is closer to £30,000 per annum. I know I would not be paying the bill personally if dead, but I consider these charges to be grossly excessive and would like to draw up our own wills. I have carried out conveyancing and other legal work after suitable research, which was very simple and I have absolutely no trust in the parasites that pray on people in the 'financial' fields, while attempting to frighten us because of our complex tax laws. I would appreciate knowing where I can research the correct formats for drawing up discretionary trusts if anyone can help.

deepdiver,

I couldn’t agree more with your post.

I have had involvement with two separate estates where solicitors had drawn up wills for elderly relatives and got themselves appointed as executors – without their clients being aware of the implications.

Their scale of charges were horrendous and every action they took was designed to maximise chargeable time.

In one case a fully itemised list of work undertaken ran to three pages. One item that was costed at approx £100 in time spent was the return of Premium Bonds to the National Savings; receipt of monies and placing monies on account. The Premium Bond was for the value of £5(five pounds)!!.

There were similar charges for payment of small utility bills.

On the advice of my solicitor, who was horrified, a complaint was made to the Law Society – which cost the beneficiaries a lot of additional money. They decided that the scale of charges “whilst high were just within the permitted scale maximum”. What they totally ignored was the unnecessary work that they undertook. We had asked to undertake some of the routine work, payment of bills etc but were told it was their responsibility as executors.

Their actions are morally indefensible and, but for the privileged and protected position of the legal profession in the UK, would border on criminality.

dunstonh

Rule of thumb. Never ever use banks for any extra service. They always charge over the odds.