Another Inheritance Tax question

56cheffy

Thanks..this all makes interesting and informative reading.:beer:

So another question:

I spoke to a 'financial adviser' at Lloyds TSB today....he suggested that I take out a 22 year term life insurance policy to cover the £143 000 debt of my 2 interest only mortgages.

Should I die, the life insurance would then not subject to IHT and my son would then use this money to pay offf the debt.
The premiums were about £66 pcm.

Is this a good idea?

I just don't like the idea of paying £66 x 12 x 22 = £17424!

margaretclare

Tiggs wrote:

For many people to hold onto assets they don't need is pointless - and while that may be hard to grasp for those without that nice position....it's still the case.

I agree that there is no point at all in holding on to assets you don't need! But mostly, that's not what people are saying at all. They DO want to hold on to assets they don't need even though they realise that 'there are no pockets in a shroud'.

If, for example, people have 'assets they don't need', why are so many people exercising their brain-power trying to avoid having to pay for their own care if they should need it in the future? This question crops up time and time again. 'How can I give away my house, put it into son/daughter's name but still continue to live in it?'

I am still saving because we don't know what we may need in the future. I have given away 'assets' in the past, and regretted it bitterly, because it caused a family split which lasted for years and is still causing pain. and no, it wouldn't have worked setting up trusts for the future, it was a question of roofs over heads being needed at the time, which was 1990.

Margaret

Tiggs_2

margaretclare wrote:

This question crops up time and time again. 'How can I give away my house, put it into son/daughter's name but still continue to live in it?'

this has a lot to do with people having poor Wills. 2 X the current Nil Band is nearly £600k and that covers most people in the UK - yet the ones who moan loudest about IHT are all those under that limit.
The ones OVER it do need to consider gifts and trusts....MOST people dont need the amounts they hold onto once they reach that level.

margaretclare

Tiggs wrote:

this has a lot to do with people having poor Wills. 2 X the current Nil Band is nearly £600k and that covers most people in the UK - yet the ones who moan loudest about IHT are all those under that limit.

This is because of all the media mis-information which scares people silly. I read within the last few days that IHT is affecting more and more 'ordinary families' who own their own homes, especially those of us in the south-east of England. In addition, people write in very emotive terms about 'protecting their inheritance'. You'd think it was all going straight into GB's personal bank account, the way some people talk. And as for 'protecting it for care costs', well, somebody has got to pay, although as TedHutchinson rightly says, it's a minority of people who need to go into care and most are not going to live many years if they do.

I am not 'moaning' about IHT because it's very unlikely to affect me, and if it did, yes, I would give some away to those who deserve it most.

However, although I have pretty strong views on most of these issues, perhaps, as you indicate, I have no right to be involved in this discussion at all.

Margaret

Tiggs_2

you have no right to tell people with different financial situations, attitudes and needs what to do based on your own "strong views" - whether that means you have nothing to contribute is for you to decide.

margaretclare

Tiggs wrote:

you have no right to tell people with different financial situations, attitudes and needs what to do based on your own "strong views" - whether that means you have nothing to contribute is for you to decide.

The only time I have 'told someone what to do' as you choose to put it is when I said 'don't reduce capital - give gifts out of income'. That is not based simply on my views, it is based on experience. I have seen people reduced to penury simply because they took the advice of 'experts' and gave away precious capital without considering their possible future needs. I have also seen a succeeding generation who expected an 'inheritance', exercising, not bullying in the physical sense, but certainly emotional blackmail.

And you have no right to tell me what I can and cannot do! My input is as valid as anyone else's.

Margaret

Mrs_pbradley936

Calm down you two – I think you both make valuable contributions to various threads and you are both sensible enough to know that you will not always agree with everything everyone is saying.

Tiggs_2

margaretclare wrote:

And you have no right to tell me what I can and cannot do! My input is as valid as anyone else's.

Margaret

calm down, what is this stroppy night here???

YOU said "However, although I have pretty strong views on most of these issues, perhaps, as you indicate, I have no right to be involved in this discussion at all."

I simply defined what, IMO, you do not have a right to do (which was a far narrower definition than your own of leaving the discussion completly.

Your experiences are of use and interest but still dont give you the right to tell someone how to (or not to) leave their capital. I could tell tales of how i see millions of pounds wasted in tax because old folks hang onto their funds pointlessly instead of giving it away - or examples of those that do and are far better off for doing so (financially and otherwise) - but that doesnt give me the right to say what someone should do.

your situation seems to be that IHT is not as important to you as your own needs for your resources, that may be because you percive large needs or hold small resources - either way it doesnt matter because for someone else the resources and needs will not be the same as you and it is those which dictate the direction they should move in.

home_alone

Tiggs wrote:

your situation seems to be that IHT is not as important to you as your own needs for your resources, that may be because you percive large needs or hold small resources - either way it doesnt matter because for someone else the resources and needs will not be the same as you and it is those which dictate the direction they should move in.

Well said Tiggs, IHT is a complex situation where everyones needs are different (more or less) I think its time another source for taxation (environmental maybe) was found and we dropped IHT for good, I always thought it unfait to tax the same bit of cash many times.

gary

Tiggs_2

home_alone wrote:

I always thought it unfait to tax the same bit of cash many times.

gary

but in reality the large bulk of IHT comes from property which would pay no tax and assets that would be liable to CGT if it werent wiped out on death - so most isnt being taxed twice.

add to that the nil band for a couple is now almost 600k and most people are fine.