Inheritance tax advice. How does it work?

tabby1471

[FONT=Times New Roman,serif][FONT=Calibri,sans-serif]Hi[/FONT][/FONT]

[FONT=Times New Roman,serif][FONT=Calibri,sans-serif]Unfortunately my mother passed away recently and left a substantial estate in her Will.

[/FONT][/FONT]
[FONT=Times New Roman,serif][FONT=Calibri,sans-serif]The problem is, the Will places me as the sole beneficiary and I want to redistribute it amongst myself and my 3 children.[/FONT][/FONT]
[FONT=Times New Roman,serif][FONT=Calibri,sans-serif]
I currently have a company dealing with this and they gave me this advice (below in blue) and what I really need to know is, is it correct and is this the most financially effective way to distribute it the Estate?

As I thought Gifting large amounts of money would immediately be liable for Tax?

I'd appreciate any advice in lay terms. I've been to various sites and it seems so complex and confusing.

Apologies in advance if I've posted this in the wrong area
[/FONT][/FONT]

[FONT=Times New Roman,serif][FONT=Calibri,sans-serif]“[/FONT][FONT=Arial,sans-serif]We discussed the possible Instrument of Variation (IOV). I understand that the intention is to gift ¾ of the residue to your three children equally. The advantage of having an IOV drawn up is so that the amended distribution of the residue is “read back” to the Will, so the gifts come from the estate to the new Beneficiaries, i.e. your children. [/FONT][/FONT]

[FONT=Times New Roman,serif][FONT=Arial,sans-serif]Whilst there are no immediate benefits in terms of Inheritance Tax, an IOV would prevent your estate being inflated. Should an IOV not be prepared and you then gift monies to your children rather than have the distribution under the Residuary Estate, the gifts could be classed as potentially exempt transfers for Inheritance Tax within seven years. I can confirm this is the only taxable risk of gifting the money. [/FONT][/FONT]

[FONT=Times New Roman,serif][FONT=Arial,sans-serif]As we are within two years of your late mother’s passing, we would recommend an IOV to vary the Beneficiaries of the estate. Of course, it is entirely your decision.” [/FONT][/FONT]

tabby1471

[FONT=Times New Roman,serif][FONT=Calibri,sans-serif]Hi[/FONT][/FONT]
[FONT=Times New Roman,serif][FONT=Calibri,sans-serif] [/FONT][/FONT]
[FONT=Times New Roman,serif][FONT=Calibri,sans-serif]Unfortunately my mother passed away recently and left a substantial estate in her Will.

[/FONT][/FONT]
[FONT=Times New Roman,serif][FONT=Calibri,sans-serif]The problem is, the Will places me as the sole beneficiary and I want to redistribute it amongst myself and my 3 children.[/FONT][/FONT]
[FONT=Times New Roman,serif][FONT=Calibri,sans-serif]
I currently have a company dealing with this and they gave me this advice (below in blue) and what I really need to know is, is it correct and is this the most financially effective way to distribute it the Estate?

As I thought Gifting large amounts of money would immediately be liable for Tax?

I'd appreciate any advice in lay terms. I've been to various sites and it seems so complex and confusing.

Apologies in advance if I've posted this in the wrong area
[/FONT][/FONT]
[FONT=Times New Roman,serif][FONT=Calibri,sans-serif] [/FONT][/FONT]
[FONT=Times New Roman,serif][FONT=Calibri,sans-serif]“[/FONT][FONT=Arial,sans-serif]We discussed the possible Instrument of Variation (IOV). I understand that the intention is to gift ¾ of the residue to your three children equally. The advantage of having an IOV drawn up is so that the amended distribution of the residue is “read back” to the Will, so the gifts come from the estate to the new Beneficiaries, i.e. your children. [/FONT][/FONT]
[FONT=Times New Roman,serif][FONT=Arial,sans-serif] [/FONT][/FONT]
[FONT=Times New Roman,serif][FONT=Arial,sans-serif]Whilst there are no immediate benefits in terms of Inheritance Tax, an IOV would prevent your estate being inflated. Should an IOV not be prepared and you then gift monies to your children rather than have the distribution under the Residuary Estate, the gifts could be classed as potentially exempt transfers for Inheritance Tax within seven years. I can confirm this is the only taxable risk of gifting the money. [/FONT][/FONT]
[FONT=Times New Roman,serif][FONT=Arial,sans-serif] [/FONT][/FONT]
[FONT=Times New Roman,serif][FONT=Arial,sans-serif]As we are within two years of your late mother’s passing, we would recommend an IOV to vary the Beneficiaries of the estate. Of course, it is entirely your decision.” [/FONT][/FONT]
[FONT=Times New Roman,serif][FONT=Calibri,sans-serif] [/FONT][/FONT]
[FONT=Times New Roman,serif][FONT=Calibri,sans-serif] [/FONT][/FONT]

Savvy_Sue

DVardysShadow wrote: »

Duplicate thread. Post on the other one https://forums.moneysavingexpert.com/discussion/3448941 to avoid splitting the dicussion

Actually, make that here, on the Cutting Tax board, where people are already giving good advice.

Savvy_Sue

Suggest people with anything to say post here, on the Cutting Tax board, to avoid duplication.