Inheritance Tax Planning

sneekymum

The really nasty bit is that it now affects those with no experience of tax-dodging.

DavidLaGuardia

Hence one of the good reasons for having boards like these to raise awareness and encourage those with little experience to seek professional guidance for a cost minimal to the potential loss in many cases

ard_up

Sorry if this has been covered before but I'm a new kid on the block. Both my wife and I are only children snd my wifes parents and my mother have left 'everything' to us. My wife's parents estate will be worth about 200K and my mothers about 230K. Will we escape IHT?
They are both in their early 80's so we have to think about it. Like most people we didn't even think about IHT until the value of houses went up.

reddevilled

pos72 wrote:

My father recently died from an industrial related disease and my mother wishes to give each of her three children part of the settlement. This would amount to £25000 each. Given that the annual tax free gift is limited to £3000/tax year per person, does anyone have any ideas as to how each of us can avoid paying tax on this gift? My brother lives in Australia, would any different rules apply to him?

You could consider a deed of variation if he died less than two years ago. This basically rewrites the will and redirects the funds. This would mean that your mother does not have the problems of gifting the money herself and risk paying IHT if she undortunately died within 7 years. It could however result in further IHT on your fathers estate depending on the size.

Jays

sneekymum wrote:

By the way - if you've got life insurance make sure its written in trust for his benefit - otherwise it would pay out into your estate - and the treasury's.

IHT is a nasty mean-minded tax.

Does anyone know how to go about writing life assurance into trust, we have been advised to do this but never how to go about it with existing policies?

TIA
Jays

margaretclare

Jays wrote:

Does anyone know how to go about writing life assurance into trust, we have been advised to do this but never how to go about it with existing policies?

Normally when you take out a new policy there is a form with it.

I would write to the insurance company stating something like: 'I wish this policy to be assigned to ......'

If it's a policy that only pays out on death, or if it pays out after a period of years, like an endowment, it's the same thing. Or you could add 'On maturity the beneficiary of this policy is......... (full name and relationship stated). Sign and date it and keep a copy along with the policy documents.

My stakeholder pension is assigned to my husband and every time I go on to the website they say 'If you died today the amount to be paid is £........'

In 5 years' time I will draw that pension, but if I died in the meantime the amount will not go into my estate, but straight to my husband enabling him to pay funeral costs.

Aunty Margaret

Jays

Thanks for your reply.

Our policies are year's old, and I can't remember putting them into trusts, whenever we have a FA in they always suggest putting them into trusts but not how to do it (I suppose they are not getting any commission on them as they did not set them up originally).

Any ideas on how to check if they are already in trust, or how to put them into trust?

TIA
Jays

margaretclare

Hi Jays

Get out the policy documents. Mine has a letter of confirmation with it saying that this is assigned to.... See if there's some kind of a letter or document with the policy.

If there isn't then write to the insurance company stating quite simply that you want the policy to be written in trust for the benefit of....or assigned to....I'm not quite sure of the exact form of words. You could always phone them first and find out!

Don't worry that they're years old - people change as time goes on. I used to have Friendly Society policies written in trust for my daughter, then I remarried, and she died, so obviously the person to benefit has changed over time.

Do it without delay! That way, if the policy matures e.g. on death, then the proceeds of the policy go straight to the named person and not into your estate. This is useful because the next-of-kin is probably the person who'll get the bill for the funeral, and won't want to wait for the months that probate might take.

Best wishes

Aunty Margaret

dunstonh

Assignment is not the same as using a trust. So make sure you use the method you need for your circumstances.

Trusts can be arranged by the advisor setting up the plan or you can pay for someone to do it. You can ask the insurer directly but you will need to tell them what trust as there a many different types available.

JeanieR

My mother is a widow (my father died in mid-1980s) and owns a property worth £1.2M (in London). Many years ago (late 1980's) my brother and I were made joint tenants of the property. My mother has been living in the property on her own since my father died, using a couple of rooms in the property to run a business (letting holiday flats).

In the past she has paid us "rent" on the advice of a solicitor, once a year (not completely consistently every year) but perhaps not at the correct market value - she has just made a rough guesstimate.

Please can anyone advise in broad terms what we would be liable in terms of inheritance tax and CGT on the death of my mother. We would probably intend to rent out the house rather than sell it after that, so we would also need to know if CGT would be liable only if we sold the house. Also if there is anything we can do to minimise the IHT/CGT we would be grateful to know. If we need to get specalist advice, can anyone advise a good solicitor for this?