Inheritance Tax: Save £100,000s with simple advanced planning Article Discussion

Keep_pedalling

SallySunshine wrote: »

Yes thanks, i do know that it would reduce the nil tax band transfer.
It wasn't really a surprise to me and we had talked about this before, it would not impact on our life really.
If we did this would it be better coming from us jointly, what impact would that have on things in the way of nil band reduction on each of us.
I'm just in the process of tying up some maturing bonds in the next couple of weeks, so that's why i'm asking him to look at things.
Also joint mortgage with her partner, so that needs to be thought through, don't want to cause any problems there.

We have done similar with our children, and have always done it as joint gifts. We have let the children worry about handling this with their other halves, who they are now both married to.

getmore4less

:money:

SallySunshine wrote: »

Just made new wills out and quite happy with result apart from minor tweaks.
One remark from a question to the solicitor has made my O.H. decide to give our daughter a very large sum of money, as he was told if he died within 7 years any IHT due from that gift would be taken out of the remaining estate, so no worries.
This is all because we are both over the IHT threshold at the moment.

I am rather perturbed as I'm sure he doesn't realise other perhaps future implications of this gift and am having rather a struggle to get him to understand without seeming selfish.:(

I may have read it wrong or misunderstood

I would be concenred if the solicitor was suggesting there would be IHT from the gift.

SallySunshine

No, he did make it clear about that, also the 7 year ruling re large gifts etc.
Although not enamoured that he had the local finance planner send an info pack.
Guess who?
Yep, St James Place.
How ironic since I'd been reading lots of posts on here.

LIZZIE1999

So I'm a new I to this site, so please be gentle with me...
Elderly mum has property worth ~1m. Substantial pension, (100k), and isas and shares (200k), how best to spend/arrange to help avoid some iht? Please. She lives at home. No substantial costs at the moment.

Keep_pedalling

LIZZIE1999 wrote: »

So I'm a new I to this site, so please be gentle with me...
Elderly mum has property worth ~1m. Substantial pension, (100k), and isas and shares (200k), how best to spend/arrange to help avoid some iht? Please. She lives at home. No substantial costs at the moment.

Is she a widow, and if so did her husband leave everything to her.

00ec25

LIZZIE1999 wrote: »

So I'm a new I to this site, so please be gentle with me...
Elderly mum has property worth ~1m. Substantial pension, (100k), and isas and shares (200k), how best to spend/arrange to help avoid some iht? Please. She lives at home. No substantial costs at the moment.

she can afford to pay for professional advice...

Arthurian

If she is a widow and her husband left everything to her, there is no IHT to pay on £325,000 (her nil rate tax band) + £325,000(her husband's nil rate) = £650,000 plus £100,000 of the house value. If husband left half to her and half to the children, there is no IHT to pay on £325,000 + £162,500 plus £100,000 of the house value. The best way to mitigate IHT is to give some to children and hope to live a further 7 years. I think you can buy insurance against the possibility of IHT liability on that should she die before the 7 years is up.

Savvy_Sue

Arthurian wrote: »

If she is a widow and her husband left everything to her, there is no IHT to pay on £325,000 (her nil rate tax band) + £325,000(her husband's nil rate) = £650,000 plus £100,000 of the house value. If husband left half to her and half to the children, there is no IHT to pay on £325,000 + £162,500 plus £100,000 of the house value. The best way to mitigate IHT is to give some to children and hope to live a further 7 years. I think you can buy insurance against the possibility of IHT liability on that should she die before the 7 years is up.

BUT she still needs professional advice, and anyone suggesting that she can shelter some of her assets in a trust to avoid paying for care / care home fees (should they be necessary) is to be avoided like the plague.

infinity87

Good evening folks.

Sadly, my father has just passed away. He's left his estate to my Mum, the house and business were run as one in joint ownership, so as far as I'm aware, my mother owes nothing in IHT. But she is very keen to sell the house/business and offload a lot to me and my brother to invest and enjoy, life we have learnt, is short and often cruel, and we have lost the most important person in our lives already at the ages of 27 & 30

The estate that now belongs to her has yet to be valued, but we estimate in total, once sold she will have somewhere between £1M and £1.2M. She doesn't want to give it all away, obviously she needs another house to live in, and enough money to live off too, but obviously we are concerned about IHT on such a large sum if she were to give me and my brother a few hundred thousand each.

Any advice? Are we both safe up to the £325,000 threshold? Any advice much appreciated

Savvy_Sue

I am sorry for your loss.

With an estate that size, your mother needs professional advice to reduce the IHT liability on her eventual death, but this probably isn't the most urgent thing on her 'to do' list. More urgently, she probably needs to be speaking to the accountant to discuss the sale of the business, and any tax liabilities from that.

One thing which may be worth considering is a Deed of Variation, which she can make within two years. This would enable her to give some of her inheritance to each of you in a way which has the effect of bypassing her estate - it's as if your Dad gave the money to you not her. That way her estate will be slightly smaller.

However, if your mum is likely to survive for 7 years then it's a non-issue anyway. I know one can never know, but gifts of any size given during her lifetime have no tax due, except that if she dies within 7 years they are counted within her estate for IHT purposes.

Whatever you do, make sure she keeps enough to enjoy a good standard of living for a long way into the future, especially if she has any health issues which might make independent living difficult in future. Avoid like the plague anyone who suggests setting up complex trusts to shelter her assets from assessment for paying for care, should it ever be needed.