Inheritance Tax

Suarez

One of my grand parents passed away 4 weeks ago leaving the other with a £200k house and £140,000 in various accounts.

I'm clueless what the best thing to do is with this? My grand father will have no use for the money and has asked my Dad what the best thing to do is but my Dad is also clueless hence the post on here (My dad can't turn a PC on and I told him I would do some research to advise him.)

He has a brother and a sister too and his brother went to a financial advisor who advised him to "get rid of the money somehow"...?!?

If they split it 3 ways would they each have to pay Capital Gains Tax?

And I've read about the £325,000 threshold which the amount will probably be just over.

Can any point us in the right direction?

Many Thanks

zygurat789

Suarez wrote: »

One of my grand parents passed away 4 weeks ago leaving the other with a £200k house and £140,000 in various accounts.

I'm clueless what the best thing to do is with this? My grand father will have no use for the money and has asked my Dad what the best thing to do is but my Dad is also clueless hence the post on here (My dad can't turn a PC on and I told him I would do some research to advise him.)

He has a brother and a sister too and his brother went to a financial advisor who advised him to "get rid of the money somehow"...?!?

If they split it 3 ways would they each have to pay Capital Gains Tax?

And I've read about the £325,000 threshold which the amount will probably be just over.

Can any point us in the right direction?

Many Thanks

So no inheritance tax as it is passing from one spouce to another and if it's only half the house which will be transferred to the survivor it is below the IHT theshold.
Was there a will?
I think what the financial advisor meant was for the money to be given, in small regular amounts to the ultimate beneficiaries so as to avoid an IHT liability on the death of the surviving grandparent.
ie £6000 in the before 5/4/12 (if not already done)
£3000 pa thereafter
£250 pa to as many people as he wishes
Any amount out of income, as opposed to capital, that do not reduce the standard of living
Gifts in consideration of marriage max £5000 to a child, £2500 to a grandchild or £1000 to anybody
Any gift to charity
The recipients will not be liable to CGT or any other tax on the gift

Suarez

zygurat789 wrote: »

So no inheritance tax as it is passing from one spouce to another and if it's only half the house which will be transferred to the survivor it is below the IHT theshold.
Was there a will?
I think what the financial advisor meant was for the money to be given, in small regular amounts to the ultimate beneficiaries so as to avoid an IHT liability on the death of the surviving grandparent.
ie £6000 in the before 5/4/12 (if not already done)
£3000 pa thereafter
£250 pa to as many people as he wishes
Any amount out of income, as opposed to capital, that do not reduce the standard of living
Gifts in consideration of marriage max £5000 to a child, £2500 to a grandchild or £1000 to anybody
Any gift to charity
The recipients will not be liable to CGT or any other tax on the gift

Thanks for all the information. We knew there wouldn't be IHT yet but the remaining grandparent is 94 and we just wanted to know if there is anything we could do now to reduce any forthcoming taxes.

I think you have covered it all with your last part. Thank you for the advice.

Does this mean each of the 3 beneficiaries should be paid £2000 each this tax year then £1000 pa after or £3000 EACH?

Also, do we have to notify HMRC when doing the transfers or just explain it if/when they query it?

Suarez

zygurat789 wrote: »

Any amount out of income, as opposed to capital, that do not reduce the standard of living

So could my grandfather use the savings to live on and split his pension income between the 3 sons/daughter?

zygurat789

Suarez wrote: »

Thanks for all the information. We knew there wouldn't be IHT yet but the remaining grandparent is 94 and we just wanted to know if there is anything we could do now to reduce any forthcoming taxes.

I think you have covered it all with your last part. Thank you for the advice.

Does this mean each of the 3 beneficiaries should be paid £2000 each this tax year then £1000 pa after or £3000 EACH?

Also, do we have to notify HMRC when doing the transfers or just explain it if/when they query it?

If you have 3 beneficiaries they could be paid £1000 each. The £3000 is a pa payment not receipt.

You are making perfectly legal transactions just like buying groceries, do you keep your supermarket till roll and notify HMRC? Just make sure it is authorised by your grandfather and just in case HMRC investigate you for any reason, like those bankers over the weekend. You should always be able to prove that monies you have received are legal and not what is termed "foreigners". How long will we be legally able to use that phrase?

zygurat789

Suarez wrote: »

So could my grandfather use the savings to live on and split his pension income between the 3 sons/daughter?

Absolutely not. savings are, by definition, capital. You are only allowed to reduced your capital as listed above.

Suarez

Okay thanks for your help

getmore4less

As long as they were married the survivor now has £650k nill rate band so there is no IHT issues to worry about.

Good idea to make sure they have a will and that someone in the family idealy is the executor.

Who did the estate of the one that passed?

Have a look at forms IHT205 and IHT400 along with the notes they cove mosts things needed for a relatively simple estate.

as there is a house this estate will need administering so not a bad idea for someone to start learning if no one currently knows how to do it.

John_Pierpoint

Three "Which?" books cover most of what is needed,

Make sure that the copyright dates are newer than 2007.

http://www.amazon.co.uk/Giving-Inheriting-Which-Essential-Guides/dp/1844901181