Inheritance Tax Planning

lisyloo

If she paid for it with a cheque then it's traceable.
If she got £10,000 worth of notes from under the mattress then it would be harder but they can still get the previous owner from the DVLA.
If that previous owner was a car delaer then they would be expected to keep records for at least six years (they would needs these for all sort of other reasons like VAT).

A private seller would not be expected to provide proof.

lisyloo

BTW - I'm not interested in helping people evade paying tax (although avoidance is OK).

So I won't be answering too many questions along these lines.

I really don't advise tax evasion even if "they might never find out".

System

It is possible for many couples to save Inheritance Tax (legally) without giving away assets they might need to live on later on.

I am not here to advertise, but do be wary of taking advice from will writers and other types who advertise in the small print of the press. You will very often find that they work out much more expensive ( )than a normal solicitor or accountant (but do be sure that your tax adviser is a specialist as these trusts - though effective - are complex)

End of sermon!

Jaime_Bien

Neil

A deed of variation broadly entails the re-writing of your late father's will to incorporate a gift to you of the maximum amount, at the time your father died, that can be given away tax free (currently £263,000, last tax year £255,000 etc.)

It needs to be signed within 2 years of the date of death by anyone who is prejudiced (financially) by the re-writing of the will - in this case your mother (as she will receive less as a result of the proposed gift to you.) If more tax is payable as a result of the variation then the executors of the will also need to sign.

For inheritance and capital gains tax purposes it will be treated as a gift from your late father, rather than your mother - so no problem with the 7 year rule etc.

Exactly the same applies if someone dies without a will.

South_Hams

South_Hams said:

You Solicitor may be correct that using the 'deed of variation' route is a good idea but I do not think that you can rely on it!

What if this 'concession' is withdrawn (at least for IHT avoidance purposes)? I agree this could happen, but many aspects of IHT and Trusts are currently under review with the added threat that some a the legislation could be retro-active.

Also, my understanding is that a deed of variation requires the agreement of all beneficiaries to a will - whether they benefit from the variation or not. If just one objects (perhaps out of spite) what do you then do? I my case the plan is to leave all to the surviving spouse to dispose of as they wish.

Also, just because you go the 'deed of variation' route what is stop you going tenants in common? You do not have to make a gift of your house just because you have gone tenants in common. I agree, but the normal resaon is to transfer the tax exempt level to children to reduce the surviving spouse's estate.

If you do go tenants in common then, when one of you dies, the surviving spouse will have another asset to bring into the 'deed of variation' equation. If the marital home remains as a joint tenancy you do not have this option. I'm not sure I follow this. The 'deed of varience' can transfer any proportion of the assets out of the survivers estate.

System

You will really need to seek the advice of an expert as you are not only changing the Will (which requires the agreement of all adult beneficiaries – in this case just your mum) but you also want to create a trust under the terms of the variation. Not something the avearge individual would contempla

Paul,

Any Idea how much I should expect to pay for Expert help. ?

System

My parents were advised to take out some kind of insurance policy that would mean us paying less IHT. Myself and two siblings now split the premium between us as we will benefit. Is this a good thing?

System

Thanks Martin for the helpful article. I have an elderly Mum who's got a bit of money in the bank and whose house is in the North and not worth a great deal. I reckon the lot is safely within the £263,000 limit. Our old car has just gone bang and Mum would like to buy us a new one to help out but is terrified that the tax-man will clobber us for it. We've told her it doesn't matter because her estate is not worth a lot..in fact we've told her she can write us a cheque for everything she has in her bank account and it still won't affect our tax position OR the inheritance tax UNLESS the value of her house eventually pushes her/us above the threshold. I'm sure that your article confirms this but if you could just say so here so that we can show her it might save her a lot of worry. She's also worried that if she has to go into a Nursing home they'll come looking to us for the money if she's already bought us a car!

Thanks for your help and keep up the good work.

Shirley M

System

My wife and I own a property worth about 400K . We also own an apartment in Spain worth about 100k. Will IHT efect the Spanish property.???

I also have outline planing to build a house in my garden how will I reduce my capital gains?????

System

You suggest giving £263,000 to the children, but what can we do if our property is the main capital we have. We cannot afford to give our savings away at present - which amount to no more than £25,000 - but our property is worth around £450,000. From what I have read trying to leave property to children is fraught with complications and is an area that the government is now making impossible to do (from ITax point of view I mean).