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Inheritance Tax Planning

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  • Thanks to both sneekymum and cheerfulcat. Must apologise, I posted this question before i had read all the listings. Am up to page 16 so far and this is a real complex subject!!
  • lululu
    lululu Posts: 4 Newbie
    Part of the Furniture First Post
    What are the tax implications for my husband and me as his uncle has given us £50,000 over the past year as a gift?
  • sneekymum
    sneekymum Posts: 4,782 Forumite
    If, when uncle dies, his estate plus any gifts over £3000 a year over (within) the last seven years come to more than the IHT threshold then tax is due at 40%. The tax is reduced for gifts according to how long ago they were given - down to zero after seven years. Any IHTax due is taken from the estate.

    If uncle gives a few gifts over his last seven years this can mean that the whole of the remaining estate is taken up with the tax. If someone is left uncle's estate and the will says that its after all due taxes are paid, then there might be nothing left.

    If there isn't enough money left in the remaining estate then the tax man will go looking for those gifts to tax. If you're in danger of that happening its a good idea to put by 40% of that gift now and reduce this reserve as the tax liability reduces.

    Of course if uncle is reducing his assetts to get free council care then that's a different matter.....
    still raining
  • Cook_County
    Cook_County Posts: 3,092 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    I do not follow the last reply because surely all uncle has to do is survive 7 years and the PET falls out of the IHT charge, or have I missed something here??
  • sneekymum
    sneekymum Posts: 4,782 Forumite
    Yes - it would be a good idea for uncle to survive seven years. No IHT to pay on gifts. But in the eventuallity of that not happening there are considerations to be made...

    16:28 added..

    It always amazes me how many people think that its somehow not allowed by the tax man to give away big sums of money! There must be many people who will end up paying IHT when they could have simply helped their families out with gifts of money (and then survived seven years - or even part of that time) while they were alive to enjoy the effect.
    still raining
  • PACH
    PACH Posts: 93 Forumite
    Does anybody know roughly how much would it cost to set up a "Nil rate discretionary trust wills " and is there any point of changing from joint ownership to tenants in common? Is there a web site where you can find solicitors that specialise in the above as I am looking for one in my area?
  • sneekymum
    sneekymum Posts: 4,782 Forumite
    Have you read all the entries in this thread? (only 218 before yours)

    I think someone mentions/recommends a company at some point...
    still raining
  • margaretclare
    margaretclare Posts: 10,789 Forumite
    PACH wrote:
    Does anybody know roughly how much would it cost to set up a "Nil rate discretionary trust wills" and is there any point of changing from joint ownership to tenants in common?

    Could you please explain what you mean by 'nil rate discretionary trust wills'?

    We have the deeds as joint tenants (previously in my name only, we were married in 2002), we have 'mirror wills' and we have no plans to change anything.

    Aunty Margaret
    [FONT=Times New Roman, serif]Æ[/FONT]r ic wisdom funde, [FONT=Times New Roman, serif]æ[/FONT]r wear[FONT=Times New Roman, serif]ð[/FONT] ic eald.
    Before I found wisdom, I became old.
  • sneekymum
    sneekymum Posts: 4,782 Forumite
    Have you read THIS?
    still raining
  • margaretclare
    margaretclare Posts: 10,789 Forumite
    Hi sneekymum

    Yes, read it, and here's a quote from Martin's article which applies to us:

    "Remember though, those with assets less than the £263,000 threshold have no inheritance tax to pay anyway".

    I think we're in a rather nice situation - not rich enough to worry about IHT but a long way off being so poor that we can't afford to live the way we want to.

    Aunty Margaret
    [FONT=Times New Roman, serif]Æ[/FONT]r ic wisdom funde, [FONT=Times New Roman, serif]æ[/FONT]r wear[FONT=Times New Roman, serif]ð[/FONT] ic eald.
    Before I found wisdom, I became old.
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