Money from brother?

tygger

With my complete agreement, my mother's estate was inherited by my brother. Probate was finalised in September.

However, on reflection, my brother would like to pay me £80,000. Is there any way he can do this without incurring a huge tax bill?

Thanks for any advice.

getmore4less

No tax on gifts.


What did the will say or was it intestate?

Horseunderwater

tygger wrote: »

With my complete agreement, my mother's estate was inherited by my brother. Probate was finalised in September.

However, on reflection, my brother would like to pay me £80,000. Is there any way he can do this without incurring a huge tax bill?

Thanks for any advice.

This is a link to HMRC - have a read and if not sure ring them up. They are very helpful.
http://www.hmrc.gov.uk/cgt/intro/gifts-inherit-divorce.htm

John_Pierpoint

tygger wrote: »

With my complete agreement, my mother's estate was inherited by my brother. Probate was finalised in September.

However, on reflection, my brother would like to pay me £80,000. Is there any way he can do this without incurring a huge tax bill?

Thanks for any advice.

In what way "finalised"?
When did mum die?

An alternative would have been to make the change by way of Deed of Variation BUT that costs a 3 figure sum in legal costs.

I know it is highly unlikely, but if brother were to pop his clogs in the next 7 years, could there be IHT issues with your £80K gift and his estate's liability to IHT ? For example could your gift come off his widow's right to inherit a 100% untouched nil rate band (currently £325K)

In the UK one can only give away £3K a year without the need to survive 7 years to get the gift out of potential IHT liability. .

getmore4less

It really depends on the will/intestste.

It could actually be that the brother inheriting it all by agreement is currently a gift from the OP to the brother.

thenudeone

There is no tax on gifts.
If your brother wishes to give you £80k he can do that without any immediate tax implications.
The only issue that might arise is that if he dies within 7 years, then the gift would be added back into his estate (on a sliding scale) to determine whether IHT is due.
Others have already mentioned a deed of variation which, if possible, would eliminate this possibility.

tyllwyd

You haven't mentioned it so everyone is assuming that you and your brother are both UK resident and UK tax payers? There is no tax on gifts in the UK, but there are different rules in other countries.

tygger

...all for your very useful advice and taking the time to post it. Much appreciated!

Mum left everything to my brother in her will - with my agreement as he lived near to her and carried the burden of her care, helping with bills, house maintenance etc. He has ended up with more than he anticipated and very kindly wants to share some with me.

Mum died in June 2010. My brother and I were executors. We had probate managed by the Co-op - this was completed and we signed off on it in September. Yes - we should have got a deed of variation but I think it would be too late now. We are UK citizens living here.

The information that there is no 'gift tax' as such but rather possible IHT implications is most useful.

Thank you all again.

John_Pierpoint

thenudeone wrote: »

There is no tax on gifts.
If your brother wishes to give you £80k he can do that without any immediate tax implications.
The only issue that might arise is that if he dies within 7 years, then the gift would be added back into his estate (on a sliding scale) to determine whether IHT is due.
Others have already mentioned a deed of variation which, if possible, would eliminate this possibility.

For the vast majority of "ordinary" people the sliding scale is a myth as the gift(s) are subjected to IHT first in the order of evaluating the deceased's estate: Viz
Does this gift of 40K 6 years ago pay IHT?
No it is well within the £325K nil rate band
What about this gift of 60K 5 years ago?
No that too is well within the £325K nil rate band
What about the house, in which the deceased lived at time of death, valued at £325K and now bequeathed to the other nephew/niece?
Oh yes that generates a £40K tax bill.

Ah here we go - family conflict over who pays for what.

sleepless_saver

tygger wrote: »

Yes - we should have got a deed of variation but I think it would be too late now.

Not too late, you have 2 years from the date of your mother's death.

getmore4less

OK so brother inherited it all.

To be worth doing a DOV it depends on the estate of brother in the next 7 years

If allready worth over £325k and no spouse it might be worth getting the £80k out of his estate.

If brother has a spouse/civil partner and plans to give it all to her/him then the nill rate band is transfered less the £80k(+ any other gifts if death within the 7 years) so combined estates need to be over £570k but this reduction continues for the second person as there estate grows so can be more critical long term.


You also have to look beyond current assets, any other inheritances etc that could boost the estate in the next few years.