Is inheritance tax payable by grandchildren

stroppymare

If I die and leave money in trust for my grandchild would that be taken into account when reckoning up for inheritance tax or would the amount left to the grandchild be exempt? thanks

00ec25

if the trust has been created by a lawyer who has experience in IHT and knows what they are doing then its contents should be exempt. However as your question is somewhat lacking in supporting details, no one on here can say for certain that it would be exempt without reading the terms of the trust, and that we obviously cannot do!

So we come back to you getting professional paid for advice to get it right in the first place

grey_gym_sock

to clarify: do you mean ...?

(1) if i put money in trust for my grandchild, and then live for at least 7 years, and then die ...?

or

(2) if i die, specifying in my will that money is to go to a trust for my grandchild ...?

i think 00ec25 was answering on the basis that you meant (1). but if you meant (2), the answer is no.

Mojisola

stroppymare wrote: »

If I die and leave money in trust for my grandchild would that be taken into account when reckoning up for inheritance tax or would the amount left to the grandchild be exempt? thanks

Yes, it will be part of the whole estate and will be counted when the estate's inheritance liability is assessed.

Savvy_Sue

Weeeellll, technically, if there is any IHT due then it won't paid by 'the grandchildren', it's paid by the estate before anything goes to 'the grandchildren' and / or any other beneficiaries.

However, if IHT looks likely to be a problem then there's no substitute for taking proper paid for advice, preferably from a STEP solicitor.

xylophone

http://www.hmrc.gov.uk/trusts/iht/transfers-in.htm

stroppymare

grey_gym_sock wrote: »

to clarify: do you mean ...?

(1) if i put money in trust for my grandchild, and then live for at least 7 years, and then die ...?

or

(2) if i die, specifying in my will that money is to go to a trust for my grandchild ...?

i think 00ec25 was answering on the basis that you meant (1). but if you meant (2), the answer is no.

yes I meant 2, and I guessed that might be the case. Thanks

CLAPTON

stroppymare wrote: »

yes I meant 2, and I guessed that might be the case. Thanks

it couldn't really be otherwise

if we could all avoid IHT by having trusts set up after our death, then no IHT would ever be collected.

harryhound

If you are the beneficiary of someone's will you can within two years of the death put that money into trust by means of a deed of family arrangement made by the executor and yourself. The tax man calls this an instrument of variation and it has the effect of "rewriting" the will as though the deceased had done it before death.

Lots of reading to do before deciding if you want to invite a trust into your family - it will need constant administration by its trustees on behalf of the beneficiaries.