IHT planning after doing the basics...

markfromsurrey

Hi,

I was wondering if I could run the following passed you to understand if there any other IHT planning options...

- Husband dies and leaves everything to wife (in her 70s)
- Total assets (house + shares) are above 650k nil-band amount (325+325)
- No mortgage outstanding or any debts
- 3k gift option already used up
- No interest in AIM shares as not financially minded
- No income coming in for surviving spouse, just small pension, living on remaining assets, cashing in shares as needed
- Taking lumps of cash out of the bank on a weekly basis undesirable for ageing spouse
- Unfortunately, I am not sure we have 7yrs grace, so gifting lumps and waiting for 7yr clock to elapse is not an option

Question: What other options are there to reduce the total asset value to below 650k in an IHT friendly way?

Discretionary gift trusts? ...are they still viewed as gifts, with no taper relief?

Any other options?...any help very very much appreciated...

noh

The easiest and most enjoyable way is to spend more to reduce the assets to below £650K.

paulfaz

It depends how near to the limit you are if these make a difference....

£250 gifts to as many people as you wish each year?

Family holidays?

New Car?

Fly_Guy

Also...

Make gifts now and fingers crossed regarding the 7 year rule.

Be happy with the £650k you'll get tax free and accept that the amount above this will be reduced somewhat with that taxation going to help run the society we all live in.

Make provision in the will for charitable donations up to a level that triggers the IHT discount.

xylophone

No income coming in for surviving spouse, just small pension,

Forgetting IHT for a moment, are you taking advantage of this spouse's current income tax allowance/10% rate?

http://www.hmrc.gov.uk/rates/it.htm

http://www.hmrc.gov.uk/taxon/worked-examples.htm

With regard to IHT, are you able to make regular gifts out of income?

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/charity-reduce.htm might be worth a look.

SeniorSam

Sorry, duplicated reply.

SeniorSam

If the death was within two years, then a Deed of Variation of the Will could be considered with possibly a lifetime interest, or not, in the assets subject to the income tax position of the survivor.

Loan Trusts, using Investment Bonds and Life funds, could be considered by the survivor, with family members as additional Trustees. If income was needed then the survivor could draw from the Loan.

Bear in mind that with the Trustee's agreement, loans or gifts could be made from the Trust to whoever they choose, if they think it appropriate.

All growth in the Trust will be outside the estate value, but any part of the original Loan remaining in the Trust, will form part of the estate.

Sam

markfromsurrey

Many many thanks to all of you.....I will take a look at all the options you mention...very much appreciated.