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

Keep_pedalling

Have you never been married or are you diviorsed or widowed?

You protect you son with a well written will.

laybourne

I have been married and divorced.
So marriage protects the assets but
the Will is key for my son?

Keep_pedalling

laybourne wrote: »

I have been married and divorced.
So marriage protects the assets but
the Will is key for my son?

I asked if you were widowed to see if you had any transferable nil rate bands available.

As it stands your nil rate bands mean you can leave your son your main home and other assets up to £500k tax free, but anything above that would be subject to IHT regardless of who benefits. If you were married anything left to the spouse would be tax free as well. (This assumes you di not die before April 6th 2020 when the numbers would £25k less)

Make an appointment with a solisitor regards drawing up a will. If you do get married it is crucial that both of you make new wills that cover your change in marital status.

If you want your son to have more of your estate you should really be looking at gifting to take advantage of the 7 year rule.

laybourne

final question...
if I marry is it correct that I could transfer the flat into my spouses name free of capital gains tax and it is then it is officially theirs...so that for simplicity my son would inherit the house valued at c 450k and spouse would be ringfenced with the flat at c250k plus other assets

Keep_pedalling

laybourne wrote: »

final question...
if I marry is it correct that I could transfer the flat into my spouses name free of capital gains tax and it is then it is officially theirs...so that for simplicity my son would inherit the house valued at c 450k and spouse would be ringfenced with the flat at c250k plus other assets

You could do that and it would come out of your estate without having to wait 7 years. The property would be deemed to be transferred at the price your paid so if they sold it they would have the same CG liability as you currently have.

You might want to build in a pre-nup agreement in with such an arrangement, in case a messy divorce happens In the future. I know they are not legally binding in the UK but courts will back them up where there are no complications like dependant minors.

Is your partner bringing in any significant assets into this marrage? Do they have any children?

laybourne

No they are not bringing significant assets c 70k...however the way I am looking at it if I don't marry or survive 7 years there will be considerable IHT c 144k...
I am one of the 1950s women who has already been badly affected by the deferment of my state pension...born march 1954 I have been deferred 6 years - as a good earner all my life this means effectively I have a deprivation of income which totals 60k …
I really don't feel happy to be up for this level of IHT when I have worked hard all my life from nothing and now open to more tax
your comment would be appreciated

Keep_pedalling

laybourne wrote: »

No they are not bringing significant assets c 70k...however the way I am looking at it if I don't marry or survive 7 years there will be considerable IHT c 144k...
I am one of the 1950s women who has already been badly affected by the deferment of my state pension...born march 1954 I have been deferred 6 years - as a good earner all my life this means effectively I have a deprivation of income which totals 60k …
I really don't feel happy to be up for this level of IHT when I have worked hard all my life from nothing and now open to more tax
your comment would be appreciated

I think you have a good basis for going forward there, and under the current rules you should be able to avoid any IHT and give both your son and partner security if you should be the first to go.

The only other thing I would add is that any current wills you have will become invalid on marrage, so you both need to make new ones. These can be done in advance, with a clause that they are done in contemplation of marrage so you don’t risk dieting intestate.

MGWilson

My mum is looking to gift some money to me and my brother. It will be around £50k each. I'm aware of the 7 year for IHT rules but her overall estate, including the gifted money, will never be near the £325k threshold.

My understanding therefore is that if she did gift the money there would be no tax implications for me and my brother even if she was to die within 7 years of making the gift. Am I reading things correctly?

Mojisola

MGWilson wrote: »

My mum is looking to gift some money to me and my brother. It will be around £50k each. I'm aware of the 7 year for IHT rules but her overall estate, including the gifted money, will never be near the £325k threshold.

My understanding therefore is that if she did gift the money there would be no tax implications for me and my brother even if she was to die within 7 years of making the gift. Am I reading things correctly?

No tax but be aware of the 'deprivation of assets' rules in case she needs residential care in the future.

evergreen

If you downsize or sell your property because you need to go into a residential home, how does the downsizing IHT property allowance work? Thanks