Inheritance Tax Planning

1connect

Hi , I thought I would relay a story that happened to us over the last few weeks. We (married couple - 2 kids) are sorting our wills and thought that a nil rated band discretionary trust would be our chosen vehicle so we could use both of our IHT tax allowances individually thereby saving about a £70k tax liability on second death... anyway...

We listened to the advice "get professional will advice" etc etc , so we called in a few people who belonged to professional will writing bodies etc ... but we were still advised INCORRECTLY...

We were told that we could set a nil band discretionary trust UPON second death, which turned out to be total RUBBISH, you can set one up on first death, but there are still rules on IHT avoidance i.e. if they think you have set it up just to avoid tax then it don’t count - so beware- anyway this will writer guy just basically told us what we wanted to hear in order to handle any objections and take the £370 fee- the worrying part is that we may have gone ahead , only for our kids to find out later it wasn’t valid - costing them £70k - disgraceful, particularly as hopefully this will be years away, and there will be no comeback in any form on the will writer...

I am now totally disillusioned with supposed professional will writers, and want to tell everyone that reads this to BEWARE - unless you need a bog standard pair of mirrored wills and fall under the IHT upper level, (you can probably do a lawpack will in this case at £10 each) basically if there is even a minor complication, or you are over IHT allowance do as we did and get several books on the subject from respected publishing houses - get to the truth of the matter , and the facts that will stand up in law after you have kicked your particular bucket.

They say that knowledge is power - but in this case it is seriously good for your wealth



Get well clued up by the books...
and take all you hear with a BUCKET of salt

cheerfulcat

1connect wrote:

I am now totally disillusioned with supposed professional will writers, and want to tell everyone that reads this to BEWARE - unless you need a bog standard pair of mirrored wills and fall under the IHT upper level, (you can probably do a lawpack will in this case at £10 each) basically if there is even a minor complication, or you are over IHT allowance do as we did and get several books on the subject from respected publishing houses - get to the truth of the matter , and the facts that will stand up in law after you have kicked your particular bucket.

They say that knowledge is power - but in this case it is seriously good for your wealth



Get well clued up by the books...
and take all you hear with a BUCKET of salt

Better still, get a decent solicitor...

sneekymum

cheerfulcat wrote:

Better still, get a decent solicitor...

Too right :T

I'm always dismayed to hear people speak of "Professional Will Writers" - its like Professional Manicurist (no disrespect meant) but the word professional often implies a level of expertise that isn't present - when its other meaning is simply that a person does this for a living.

oceanblue_3

1connect wrote:

Hi , I thought I would relay a story that happened to us over the last few weeks. We (married couple - 2 kids) are sorting our wills and thought that a nil rated band discretionary trust would be our chosen vehicle so we could use both of our IHT tax allowances individually thereby saving about a £70k tax liability on second death... anyway...

We listened to the advice "get professional will advice" etc etc , so we called in a few people who belonged to professional will writing bodies etc ... but we were still advised INCORRECTLY...

We were told that we could set a nil band discretionary trust UPON second death, which turned out to be total RUBBISH, you can set one up on first death, but there are still rules on IHT avoidance i.e. if they think you have set it up just to avoid tax then it don’t count - so beware- anyway this will writer guy just basically told us what we wanted to hear in order to handle any objections and take the £370 fee- the worrying part is that we may have gone ahead , only for our kids to find out later it wasn’t valid - costing them £70k - disgraceful, particularly as hopefully this will be years away, and there will be no comeback in any form on the will writer...

I am now totally disillusioned with supposed professional will writers, and want to tell everyone that reads this to BEWARE - unless you need a bog standard pair of mirrored wills and fall under the IHT upper level, (you can probably do a lawpack will in this case at £10 each) basically if there is even a minor complication, or you are over IHT allowance do as we did and get several books on the subject from respected publishing houses - get to the truth of the matter , and the facts that will stand up in law after you have kicked your particular bucket.

They say that knowledge is power - but in this case it is seriously good for your wealth



Get well clued up by the books...
and take all you hear with a BUCKET of salt

I'm sorry to hear about this experience of yours. Clearly the information you were given was wrong and, if I were you, I would make contact with the professional body to which these will-writers belong so that you can tell them of your dissatisfaction. I must say that your experience has been quite different to mine: the person I work with has already proved his worth, and has saved one client's family tens of thousands of pounds through the use of a trust for business assets.

Nevertheless, I am very interested to hear more about what you say here: "if they think you have set it up just to avoid tax then it don’t count". I have never known of a Nil Rate Band Discretionary Trust being challenged by the Capital Taxes Office; if fact, the practice has recently been scrutinised once again, and has emerged totally unscathed.

With regard to there being no comeback on the will-writer, I think you'll find that all genuine practitioners are obliged to carry substantial Professional Indemnity insurance as a safeguard to those they advise.

kezza1066

I am about to be given a gift from my parents to help me purchase my first property but i intend to let my parents live their is their a problem with inheritance or capital gains tax?

sneekymum

kezza1066 wrote:

I am about to be given a gift from my parents to help me purchase my first property but i intend to let my parents live their is their a problem with inheritance or capital gains tax?

1. Possibly & 2. Probably

1. Possibly - The gift would not be exempt from IHT - even after 7 years - this only matters if your parents assets are over the nil-rate band threshold.

2. Probably - There is no exemption from CGT on any increase in value if the property is not your main residence.

Lezl

MSE_Martin wrote:

To read the article this relates: Inheritance Tax

To discuss it or ask a question just click reply.

Reading through the advice on Inheritance tax, I was interested to see a suggestion a while back, that you can invest any amount you choose, in your own name, with total control and that it can be liquidated at any time. The only stipulation being that the investment is held for at least 2 years, after which the entire investment is free of all IHT no matter how the will is left. Any chance I can get some more information on this thread please, as it sounds like just what my mum is after as a way to secure monies which may be liable to IHT. She is a widow of 10 years and has assets which take her over the £263,000 threshold and is unsure how to proceed.

sneekymum

Lezl wrote:

Reading through the advice on Inheritance tax, I was interested to see a suggestion a while back, that you can invest any amount you choose, in your own name, with total control and that it can be liquidated at any time. The only stipulation being that the investment is held for at least 2 years, after which the entire investment is free of all IHT no matter how the will is left. .

I think you're referering to AiM quoted shares?

Shares that are NOT listed on a recognised stock exchange qualify for Business Property Relief. However, most are high risk - Bestinvest (an on-line IFA) advise that these are not worth considering if your totals assets are less than £500K - and even they advise not puting more than 20% of your wealth in them.

Lezl

sneekymum wrote:

I think you're referering to AiM quoted shares?

Shares that are NOT listed on a recognised stock exchange qualify for Business Property Relief. However, most are high risk - Bestinvest (an on-line IFA) advise that these are not worth considering if your totals assets are less than £500K - and even they advise not puting more than 20% of your wealth in them.

Thanks for that. Do you have any alternative suggestions for my mum then? Other than the gifting of £3,000 each year, which she has been doing, and the £250 gifts to anyone she cares to give to, how else can she take her assets down to the threshold allowed, but keep some monies accessible incase of an emergency so that IHT is avoided. HELP!!

oceanblue_3

Lezl wrote:

Thanks for that. Do you have any alternative suggestions for my mum then? Other than the gifting of £3,000 each year, which she has been doing, and the £250 gifts to anyone she cares to give to, how else can she take her assets down to the threshold allowed, but keep some monies accessible incase of an emergency so that IHT is avoided. HELP!!

How much information can you give concerning her age, the value of her assets (and how she owns them), her state of health, income, existing provision for IHT mitigation, her attitude to IHT, etc? The more information the better.