Can I give someone £90,000?

North_Country_Boy

Hi All,

Apologies if this has already been asked, but I've been trawling the forum for 2 hours and haven't found anything that answers my question specifically.

I belong to a fractious family which over the years has split into several warring groups. What can I say - Northerners bear a grudge. For a long time.

I (and I alone) currently stand to inherit the entire estate belonging to my grandparents due to several other family members being 'cut out' of their will following petty arguments involving money (including their only daughter, my Mum). However, I haven't been affected by these same disagreements and at the point that I inherit, I'd like to share 50% of my inheritance with my sister (I've figured my Mum is wealthy enough already having just retired on a huge final salary pension at 55 and with no mortgage).

Whilst I can't be sure how much the estate will be worth when they pass away, it is currently worth around £180,000 (£160,000 is the house with c. £20,000 in minor assets). Assuming I inherit the lot, can I simply 'give' my sister £90,000 in cash?

Please note I know nothing about tax other than we usually have to pay a lot of it to avoid us all getting too rich and not having to work anymore. I can't see that my plan to hand over 50% to my sister would be without tax implications, but could anyone let me know precisely what the implications are and what my options might be?

Thanks!

dzug1

It's totally without tax implications providing you survive 7 years from the date of the gift.

If you don't then the gift is added back into your estate for inheritance tax purposes.

If you want to avoid those tax implications then you can execute a deed of variation (cost probably a few hundred ££) at the time of receiving the inheritance. It requires the formal agreement of anyone adversely affected by the change to the will that is being effected.

prowla

North_Country_Boy wrote: »

Can I give someone £90,000?!

Yes, me!

John_Pierpoint

dzug1 wrote: »

It's totally without tax implications providing you survive 7 years from the date of the gift.

If you don't then the gift is added back into your estate for inheritance tax purposes.

If you want to avoid those tax implications then you can execute a deed of variation (cost probably a few hundred ££) at the time of receiving the inheritance. It requires the formal agreement of anyone adversely affected by the change to the will that is being effected.

...........and could get complicated if there is a beneficiary in the will who is a minor.
But if it is all from your share, you have two years to give it away, without getting muddled up in the 7 year rule, though there could be income tax and CGT involved during the period you are still the beneficiary and presumably selling the house etc.

Now who is going to be the executor? and where have they hidden the will?

(Still time for the grandparents to leave everything to a charity - like the case of the well paid daughter, who went to look after the parents living on their farm).

robpw2

yes please

North_Country_Boy

John_Pierpoint wrote: »

...........and could get complicated if there is a beneficiary in the will who is a minor.
But if it is all from your share, you have two years to give it away, without getting muddled up in the 7 year rule, though there could be income tax and CGT involved during the period you are still the beneficiary and presumably selling the house etc.

Now who is going to be the executor?

(Still time for the grandparents to leave everything to a charity)

Thanks for the advice - it would be wholly from my share as I'm the sole beneficiary. The executor will be their family solicitor.

I'm likely to survive for more than 7 years (I'm currently only 30) after making the gift to my sister, so does this mean there are no tax implications? What about from her point of view - would she have to pay tax on it or declare it at all to HMRC?

roger196

Your sister would only be liable to IHT on the gift if you died within seven years AND your total estate was over the IHT threshold ( £325K from 6th April 2010). This assumes you did not go down the deed of varaition route.
Your sister is obliged to declare to HMRC any interest received on the 90k but not the 90k itself. However it is much better to include a note on the tax return as to the source of the capital to reduce the chance of an enquiry starting, especially if she is self-employed.

ViolaLass

Looks like you've been given all the advice you need and Ican't add to it. Just wanted to say how nice it is that you want to share the money with your sister when there is no obligation (legal, at least) for you to do so and when it is such a large amount of money.

North_Country_Boy

ViolaLass wrote: »

Looks like you've been given all the advice you need and Ican't add to it. Just wanted to say how nice it is that you want to share the money with your sister when there is no obligation (legal, at least) for you to do so and when it is such a large amount of money.

Many thanks to everyone for the great advice. A few people have said the same thing to me recently ViolaLass but I know first-hand how money can easily become the route of all evil (my family is living proof) and life's too short to fall out with your flesh and bood over something so petty isn't it? £90,000 is a lot to give away, but it'll make a big difference to both our lives and that's worth so much more.

John_Pierpoint

The probate process is likely to take a year, unless your grandparents are particularly well organised and up to date and have simple assets and the solicitor/executor is completely on the ball and the house can be sold without difficulty and the tax office of the deceased is not overloaded.

You should get one of these if you get paid any money from the executor in the tax year, as it it assumed that he will be paying out the interest earned during the probate first (sorry, his fees are not tax allowable against the estate) so be careful how you sell the house. If your figures are right you don't really want to make much of a profit over the probate value.

http://www.hmrc.gov.uk/pdfs/r185.pdf

Sister might get accused of being a drug dealer, when the 90K cheque hits her account from yours:rotfl:. My son caused a ripple of excitement with the money laundering section of the bank picked up an a similar concept when his great grandmother's money came through. He had to fill in a money laundering form. So when his sister qualified for her share, I dribbled it out as several cheques.

However there is a lot of water to go under the bridge before your grandparents pass on, I would think.