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

AndyPK

If you don't rush the will paperwork then I assume you can advertise it forsale, and then push the paperwork through once the sale is firm.

Keep_pedalling

AndyPK wrote: »

If you don't rush the will paperwork then I assume you can advertise it forsale, and then push the paperwork through once the sale is firm.

Not really, if IHT is due then you will start racking up penalties if the returns are not done within 6 months.

xylophone

Oh wow. If the house is sold, does that not mean that the grandchild becomes homeless until the cash arrives from the house sale? Is there any way they can get HMRC to take a second charge on the property?

Are you saying that at least one of the grandchildren is living with Grandpa?

Are you implying that Grandpa's illness is terminal?


https://www.moneysavingexpert.com/family/inheritance-tax-planning-iht/

It would seem that the executor will need to take out an executor's loan secured against the property to pay the IHT.

https://www.co-oplegalservices.co.uk/media-centre/articles-jan-apr-2018/do-you-have-to-pay-inheritance-tax-before-probate-is-granted/

https://www.gov.uk/paying-inheritance-tax/yearly-instalments

Presumably the grandchild (ren) could remain in the property until it was sold.

buzzard

Babycakes wrote: »

According to Zoopla 1.1 million.

I am not an inheritance tax specialist. In this situation I would suggest speaking to one to check that what I propose is valid. Each year the grandfather gives each child a share of the house to the value of £3000. Obviously this is a small share but you can gift £3000 a year free of inheritance tax and reduce the value of the estate. If grandad is not terminal a few years of this would make a big difference and still leave him with the majority interest in the property.

If the grandchildren live in the house and have a right to reside there the value would drop, possibly to less than the inheritance tax threshold, so he could give them a tenancy. I dont think this would be a HMO as they are related to each other but that would need to be checked.

All of this would almost certainly count as deprivation of resources if he needed a care home.

suethedriver

New Question.
Having extensively read through posts on this subject i am still confused !
Situation . my father wants to sign house over to myself & brother but unlikely to live 7 years so i am trying to find alternative solution to his IHT worries.
Father & mother 86 & 80 Married . Father owns house in his sole name £400K ish
His other assets approx 400K savings , stocks & shares etc.
Will to leave everything to mum if he dies first..
Then on mums death everything to myself & brother 9 currently both divorced & single & personal home owners)
Am i correct in thinking that the estate ( basically me & bro`s ££ loss) will only pay IHT on anything above the 325 x 2 + main residence allowance ?
Would it be beneficial for dad to leave me & bro some of his savings ( under £ 325 on his death but would still leave enough for mum to live on ... ?
We will make an appointment with an advisor but just wanted to try and get a gist before we go if possible . Thankyou

Mojisola

suethedriver wrote: »

my father wants to sign house over to myself & brother but unlikely to live 7 years so i am trying to find alternative solution to his IHT worries.

If he signed the house over to you and continued to live there without paying you rent, it wouldn't matter how many years he lived for, the value of the house would still be counted for IHT purposes.

Your mother may be around for another 20 years - surely she should inherit so that she has assets to run her own life.

Tom99

suethedriver wrote: »

New Question.
Having extensively read through posts on this subject i am still confused !
Situation . my father wants to sign house over to myself & brother but unlikely to live 7 years so i am trying to find alternative solution to his IHT worries.
Father & mother 86 & 80 Married . Father owns house in his sole name £400K ish
His other assets approx 400K savings , stocks & shares etc.
Will to leave everything to mum if he dies first..
Then on mums death everything to myself & brother 9 currently both divorced & single & personal home owners)
Am i correct in thinking that the estate ( basically me & bro`s ££ loss) will only pay IHT on anything above the 325 x 2 + main residence allowance ?
Would it be beneficial for dad to leave me & bro some of his savings ( under £ 325 on his death but would still leave enough for mum to live on ... ?
We will make an appointment with an advisor but just wanted to try and get a gist before we go if possible . Thankyou

Your parents have £650k NRB between them and from April £350k RNRB so a total of £1m, well above their total assets of £800k, so there will be no IHT and no need to think about giving anything away.
If your father left you, say £100k, on his death then he will have used £100k of his NRB so your mother will be left with £900k IHT allowance.

Keep_pedalling

It would be foolish to sign the house over to you, as that may very well create a capital gains tax issue for you when it eventually sold. It would be better to make his wife a joint owner so that it passes automatically to her on his death.

If your mum does not have savings of her own above £200k then it is unlikely that any IHT will be due on the second death.

In his shoes I would prefer to make some cash gifts from his savings, so that he get to see his money being put to good use helping his family while he is still alive. If you mum is much more likely to live longer, then he can gift to her first, and the gifts coming from her to you have a better chance of becoming IHT exempt.

VivienneC

I'm executor for a friend's will and I can't find the advice I need on domicile rules to help me complete the IHT return. My friend's husband is the sole beneficiary, and according to gov.uk guidance the spouse can inherit without paying inheritance tax, providing both have been domiciled in the UK their entire lives.
My friend fulfils that criterion, but her husband does not, as he was born overseas, though he has lived in England for the last 45 years.
I've read hundreds of pages of information on inheritance tax, but nowhere can I find out what happens in the case of a spouse who is sole beneficiary but wasn't born in England.
I'd be so helpful if anyone can help.

Savvy_Sue

I wonder if the answer to this depends on where he was born?

In any case, I'd have thought it was worth a call to HMRC.