Inheritance Tax

OldNelly

margaretclare wrote:

The idea of putting the house into both names as 'tenants in common' helps with inheritance tax.

Transferring it to a charity would come under the heading of 'deprivation of assets' as previously explained.

The house can't be used to fund care home fees as long as one of the spouses is still living there.

I am a bit gobsmacked by this question. Dad has a property worth £650K and he doesn't want to use this huge amount to fund care home fees (should these become necessary)? So he wants to get rid of it all and let the fees be paid by the state - the taxpayer, that's you and me? Just tell me - why my taxes should go towards this???

Aunty Margaret

It is not "your" taxes, it is the homeowners' taxes.

This home owner has obviously paid his taxes through life as his contribution to care paid for by the state.

IMHO this person is much more deserving of "free" care than someone who has never worked/paid taxes or someone who has !!!!!! all of their money up the wall and has no house to show for it.

There are too many of these "freeloaders" draining funds from where they have been earned.

Why should someone who contributed nothing, be entitled to everthing, and those who have paid their way get nill?

exil

They don't get "nil". They get the same level of state contribution towards their care as anyone else - once their assets are disposed of. Care is so expensive that even after selling a house the state is going to have to contribute.

Look at it this way - before state assistance to the elderly, you had the choice of - paying for care yourself: getting relatives to pay: or going into the workhouse.

Now, you can still pay for care yourself: you have no chance of getting relatives to pay, they're too busy counting up the money you're going to leave them: or you get help from the state, if your assets are not in themselves enough to pay for your care.

So - abolish the state help and you will actually have to use YOUR assets to pay for your parents' care. Give the state help to everyone including millionaires and tax will have to go up to pay for it, hardly the result you're looking for I think.

I hope you're not saying everyone who reaches 80 without their own house is a freeloader or wastrel. I really hope you're not, as if you are you will be receiving a virtual bunch of fives. Many people work extremely hard but in low-paid jobs, or have become ill during their main breadwinning years, or have taken time out to bring up children, or to look after elderly relatives. OK, some people might have drunk their entire incomes but they are probably not going to make it to an advanced age!

And of course (1) you also pay tax when spending money (VAT, customs duties) (2) you pay no tax on the capital gain on your own house (and the value of your house when you're 80 will be nearly all capital gain) - or indeed on any assets that have not been liquidated. And if we remove any form of tax on inheritance and gifts then houses and other wealth will pass tax-free between members wealthy families, so eventually only those who inherit will be able to afford to have a house. This is how large estates built up in the first place, through inheritance.

OldNelly

exil wrote:

I hope you're not saying everyone who reaches 80 without their own house is a freeloader or wastrel. I really hope you're not, as if you are you will be receiving a virtual bunch of fives. Many people work extremely hard but in low-paid jobs, or have become ill during their main breadwinning years, or have taken time out to bring up children, or to look after elderly relatives. OK, some people might have drunk their entire incomes but they are probably not going to make it to an advanced age!

QUOTE]

Steady on! I don't want a fight, I'm not like that...

Far from it, I believe that people who have worked their whole lives or those wgh were unable to work, are entitled to everything they can get from the state, wether they are a homeowner or not. I have been brought up to be careful with money and to live within my means.

I have seen that it is too easy to play the system. I resent my taxes being spent on those who have "medical conditions" (that dont exist), and those who start a family when they cant afford it.

You have to remember that not everone has the approach of enjoying money as soon as it is earned. A massive proportion save so that they have something to pass on to their family. I am saying that they should not be penalised for this.

The way it is going, I can't currently afford to buy my first property but when my parents pass on I will have to sell the family home to pay the IHT.

Andy_L

OldNelly wrote:

The way it is going, I can't currently afford to buy my first property but when my parents pass on I will have to sell the family home to pay the IHT.

Avoidable with Loan/Mortgage/Life Insurance/Proper planning

Andy

Cook_County

elliebean is already out of date. Anyone with a nil rate discretionary trust written in their Will (or indeed ANY other kind of trust in the family) should be discussing the trust with the solicitors who drafted it in the light of last week's Budget announcement.

I realise the Finance Bill has yet to be published, but for now the safest way of avoiding IHT remains to spend everything while you are here to enjoy the money...if you can't quite do that then give it away now (eg to the children) and live another 7 years.

margaretclare

exil wrote:

They don't get "nil". They get the same level of state contribution towards their care as anyone else - once their assets are disposed of. Care is so expensive that even after selling a house the state is going to have to contribute.

Look at it this way - before state assistance to the elderly, you had the choice of - paying for care yourself: getting relatives to pay: or going into the workhouse.

Now, you can still pay for care yourself: you have no chance of getting relatives to pay, they're too busy counting up the money you're going to leave them: or you get help from the state, if your assets are not in themselves enough to pay for your care.

So - abolish the state help and you will actually have to use YOUR assets to pay for your parents' care. Give the state help to everyone including millionaires and tax will have to go up to pay for it, hardly the result you're looking for I think.

Thank you for this, exil. You can imagine I'm a bit sensitive about this. I have had relatives die in a workhouse, some were even born in one, my grandfather died in what had been a workhouse infirmary a few months before the NHS started. His brother-in-law died in what had been another workhouse infirmary, only by that time they'd all been painted magnolia and called 'geriatric hospitals'.

OldNelly says: 'it is not "your" taxes, it is the home-owner's taxes'. Yes, but I might need my own taxes to pay for my own care. My DH and I have a total of 102 years in the workplace between us, obviously paying tax all that time (in fact the tax year 2005/6 was the only one in my life that I've ever had no tax to pay at all). We have a house valued approx £160K. Should either one of us have to pay for care, obviously £160K wouldn't go far. Why therefore should someone who has an estate valued at £650K (and that's just the house!) not be asked to pay for his care?

Margaret Clare

exil

Give over. The threshold is heading for 300k which is still a lot of money. 3 times what my house is worth (though I do have other savings and insurance so probably would pay IHT if me and OH dropped dead tomorrow). I AM one of those people who saves money. I save because I am well paid enough to afford to. Not everyone is.

The case of people living in the parental home and having to pay IHT is one I WOULD look at if I was chancellor. However what I would favour is a concession for people who don't own a house in their own right and who's parents' house is their primary residence, not abolition of IHT which would enable families to build up vast estates over a period of a few decades. IHT does only hit 6% of the population.

The "care home" problem probably affects more people as there is no threshold, and no time limit for gifts. But it is NOT the case that people who own their own house get no help from the state!

elliebean_2

Cook_County wrote:

elliebean is already out of date. Anyone with a nil rate discretionary trust written in their Will (or indeed ANY other kind of trust in the family) should be discussing the trust with the solicitors who drafted it in the light of last week's Budget announcement.

I realise the Finance Bill has yet to be published, but for now the safest way of avoiding IHT remains to spend everything while you are here to enjoy the money...if you can't quite do that then give it away now (eg to the children) and live another 7 years.

Nil Rate Band Discretionary Trusts are still a valid way of mitigating inheritance tax. The Chancellor's announcement impacts on Accumulation & Maintenance Trusts (for minors) which are over and above the nil rate band and Interest In Posession Trusts which are over and above the nil rate band.