Inheritance question

PetrNem

Hi all,

My Grandfather passed away about 6 months ago and didn't leave a will. My mother was awarded probate and last week completed the sale of his house.

He left a lot of debt behind and this will be cleared. Out of what is left my parents plan to give my brother and I £5,000 each.

Are there any tax implications here for us?

I earn £32,000 per year, my brother is a student. Can my parents just transfer us the money and we forget about this, or will I then be taxed on it at 22% as I'm already well over my personal limit?

Any feedback appreciated, thanks.

Alfie_E

No, there can be no tax consequences for you. If your parents are planning to give you £5000, this is their gift to you, and has nothing to do with inheritance. My understanding of the intestacy rules is that you could only have been entitled to an inheritance had all your grandfather’s children died before him.

It’s up to your mother to ensure that:

• any inheritance tax is paid, although it seems unlikely there will be any to pay, as you suggest there isn’t a lot left now all the debts have been cleared;
• any capital gains tax is paid, should that be due on the increase in the value of the house between the date of death and the date of sale; and
• those who do inherit are made aware of their share of any taxable income made by the assets of the estate before those assets are are distributed.

If your mother is employing a professional to help her administer your grandfather’s estate, that professional will be responsible for the above.

cash99

Assuming you parents have not gifted you any other money, then it would be best to ensure that 5k is paid individually by one of them to you and your brother. In this way it will be covered by their own £3k per annum ( plus £3k from the previous tax year if unused) IHT exempt gift allowance. Otherwise the gifts could form part of your parents estate, and be subject to IHT, should they die in the next 7 years.

A morbid subject, but good moneysaving.