inheritance advice needed

getmore4less

Gers wrote: »

Just to add that the amount of inheritance tax is staggered - from 1- 3 years full tax and then in decreasing amounts until it reaches 0%. I received such a PET (Potentially Exempt Tax) gift last year and so did some research myself. Interestingly I also found out that the tax is payable by the estate (in the first instance) and the recipient is only liable if there is not enough in the estate to pay the tax.

If you mum does give this money away I hope it makes a difference to those who receive it and that they make the most of it. As it's given in love so I hope that they love using it.

This only applies if the gifts* are in excess of the nill rate band so over £325k upto £650k.
http://www.hmrc.gov.uk/inheritancetax/how-to-value-estate/gifts.htm#4

Where tax is due it is payable by the recipient of the gift in the first instance.
http://www.hmrc.gov.uk/inheritancetax/paying-iht/who-pays.htm.
scroll to Example one

* total of the gifts in the last 7 years and the newest get the taper relief once over the nil rate band.

grey_gym_sock

i don't know whether the solicitors really can't do this, or just think it will be more work for them. i wouldn't be surprised if they have to verify the identities of anybody they pay money to, so it could well make it more complicated for them.

is there any reason why your mother can't receive the money herself and then pass it on as soon as it's cleared?

or does she think there's a reason? because if she thinks it will avoid any potential problems with inheritance tax or "deprivation of assets" (just speculation - these may or may not be issues), it won't.

kidmugsy

Can one really do a Deed of Variation if there is no will to vary?

If one can't, is there no other way to achieve the same effect? For instance, could Mother refuse the inheritance; if so would it pass directly to her children?

getmore4less

kidmugsy wrote: »

Can one really do a Deed of Variation if there is no will to vary

Yes. It is not a variation of a will(even when there is a will).

holly_hobby

safc66 wrote: »

my mother is 87 and is due to receive an inheritance from her spinster brother of a considerate amount, my mother has requested that myself and my brothers and sisters receive her inheritance made out in equal amounts to each of us, the solicitor has said that this is not possible as it is classed as money laundering, is this correct or is there any way around this.

Its simply a case that he has to follow the bequests as laid down in the will (or under the laws of intestacy), unless a deed of variation is permitted and administered.

Dreadfully simple solution to all this ....

Mum receives monies, writes out individual cheques for each of you children/effects individual bank transfers - for the sum she wishes to give each of you.

Simple, unless I've missed the point that there is a more contrived and underlying reason why she doesn't want the monies to initially go though her bank account .... such as qualification to means tested benefits etc .... ??

If that is the reason, her gifting the monies has no bearing on the fact that the actual reciept of it in the first place will affect her entitlement. So, in mind of this, she may wish to consider holding onto it instead - or you children help her out financially re any loss of benefits off the back of her inheritance which she has donated to each of you.

PET regs, well we can get into this later to save confusing the issue, but will only be a prob if Mums net estate (on death)is likely/will exceed 325k (or max 650k if there is also any unused decd spousal nil rate band available). If you need any help on this, shout.

Hope this helps

Holly

Aegis

Simple, but as you pointed out, if the estate plus those gifts would likely equal £325k or more, potentially very inefficient.

I'd suggest that the OP speak with their solicitor about the possibility of drawing up either a Deed of Variation or a Deed of Disclaimer, either of which can be lodged within two years of the date of death to vary the standard distribution of bequests with the consent of those who would otherwise have received them.

This should be possible as long as the mother does not have someone making financial decisions for them in the form of an attorney (attorneys are, from memory, barred from gifting away capital for the purpose of IHT mitigation).

It does sound like this is something the solicitor should have known about and suggested if it were possible though, so I have to wonder why they didn't point this out themselves.

Linton

Agree with looking at Deed of Variation, as Aegis has said provided the beneficiaries agree a will can be changed. If there is a potential problem with deprivation of assets and the inheritance is very large perhaps mother can retain sufficient to ensure that there will be no call on state benefits for the rest of her life.

getmore4less

Linton wrote: »

Agree with looking at Deed of Variation, as Aegis has said provided the beneficiaries agree a will can be changed. If there is a potential problem with deprivation of assets and the inheritance is very large perhaps mother can retain sufficient to ensure that there will be no call on state benefits for the rest of her life.

The only person that needs to agree the DOV(if used) is the mum.
(based on what has been said so far)

unless there are to be tax savings it is probably not worth bothering.

xylophone

http://www.adviceguide.org.uk/england/relationships_e/relationships_death_and_wills_e/who_can_inherit_if_there_is_no_will___the_rules_of_intestacy.htm
"Rearranging the way the estate is shared out

It is possible to rearrange the way property is shared out when someone dies without leaving a will, provided this is done within two years of the death. This is called making a deed of family arrangement or variation. All the people who would inherit under the rules of intestacy must agree.

If they agree, the property can be shared out in a different way so that people who do not inherit under the intestacy rules can still get some of the estate. Or they could agree that the amount that people get is different to the amount they would get under the rules of intestacy.

If you think that the way the estate is shared out should be rearranged, you will need legal advice. "

Vortigern

There's a very similar case HERE

I should add that the above link is to mumsnet, so not proper legal advice.
I should also add that I'm not a mumsnet user! I just googled "intestate deed of variation"

The OP will need proper legal advice and possibly a better solicitor.