Inheritance tax query

CLAPTON

billymandy wrote: »

Would it be too late to do this in respect of the £50k already received?

your mother has two years to do this

billymandy

Thanks everyone. Will look into the Deed of Variation option.

xylophone

http://www.pwwsolicitors.co.uk/services/private-client/what-is-a-deed-of-variation
http://www.hmrc.gov.uk/cto/customerguide/page21.htm
might be of interest.

kidmugsy

If you go to the expense of a lawyer to get the Deed of Variation done, do consider whether you want your share of the cash to pass through straight to you personally, or instead pass into a discretionary trust with yourself, husband and future sprogs, grandsprogs etc as beneficiaries. You and (say) your sister could be the trustees. The lawyer could explain the advantages.

xylophone

kidmugsy wrote: »

If you go to the expense of a lawyer to get the Deed of Variation done, do consider whether you want your share of the cash to pass through straight to you personally, or instead pass into a discretionary trust with yourself, husband and future sprogs, grandsprogs etc as beneficiaries. You and (say) your sister could be the trustees. The lawyer could explain the advantages.

And the administration needed....http://www.hmrc.gov.uk/trusts/types/discretionary-accum.htm

John_Pierpoint

CLAPTON wrote: »

your mother has two years to do this

.........from the date of death.

There can be advantages if the bequest has created income tax and capital gains tax liabilities since the death and before the DoV.

The Deed of Variation is likely to cost £500+ especially if it created a discretionary trust. Probably not worth creating a trust for only £100K as the trust is another tax paying legal entity, it gets taxed as though it was a really rich banker: 50% on most of its income.
Someone needs to act as its accountant. Keep things simple and that could be a day and a half a year.

BUT the beneficiary, especially if it is a toddler can claim the tax back HOWEVER the trust has to keep accounts for its "Tax Pool" and pay enough tax to make sure that the tax has been paid for the toddler to reclaim.

Are you with me so far ?

OP - You and I don't make these rules - we would just have to administer them.

Perhaps some "informal family arrangement" might be a cheaper way of channelling wealth to a younger generation?