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

dzug1

teris wrote: »

I would love to have some advise.
My husband & I both own a property each, our sole names.
We've been advised by a Fin Advisor to do tenants in common on both properties and create a family trust so to protect us from IH tax if the other dies. However I don't likre the sound of putting a complete stranger as a trustee and legally an owner of the trust.
I've been looking at trusts but there are so many different kinds. Any ideas?

It doesn't have to be 'a complete stranger' if you have relatives and/or friends willing to take it on. I can understand them being reluctant though. A drawback of trusts is the amount of paperwork, etc, required to run them.

A professional will ensure that the terms of the trust are kept to rather better than amateurs

Banton

shortchanged wrote: »

Your post sounds a bit confused. Firstly your saying your mum has passed away, then in your final paragraph you are asking for advice on reducing IHT once your mum has passed.

I don't really understand how you can't afford to pay the IHT. Usually the IHT will be sorted out from the legal side before any money or assets are distributed, therefore I don't understand why it would be unaffordable for you.

Sorry for the confusion. My mother has passed and we are now in a position where we have to pay IHT. Where I used the term "once" what I actually meant was reducing IHT now that she has already passed.

As I said in my original post. The total sum of assets left to me and my brothers is around £530,000 and therefore we have to find £82,000 for IHT. We just don't have that sort of money lying around and we are not in a position to take out an extra mortgage on the property to settle the debt.

This brought about my question, whether there is a way to reduce the IHT through some loophole or legal process.

Hopefully this now makes sense and thanks for replying.

Banton

dzug1 wrote: »

One or more of the banks she used will probably release the money to pay IHT. National Savings certainly will if she had any. At worse the estate can get a loan.

I can't see any way of reducing IHT, unless you all agree to a Deed of Variation and leave £150K to charity

Hi there, Thank you very much for the reply. Unfortunately, all of her savings won't cover the cost of IHT. Infact her bank accounts only managed to cover the cost of the funeral.

We are at the moment considering taking out a loan against the property but was really hoping there was a legal loophole or process that we could go through to reduce the total IHT bill.

Thanks again for your reply.

John_Pierpoint

Why do people make wills that leave out the major beneficiary (HMRC), who has to be paid first?
This beneficiary has to be paid within 6 months or interest is charged (The ordinary specific, beneficiary has a default position of being paid interest if unpaid after 12 months.)
Is the will clear on how the IHT is to be apportioned amongst the beneficiaries?

Real estate valuations for IHT purposes are validated by reference to Valuation Office Agency (used to be called district valuer). We the citizens now have access to much of the information used by the VOA.
If the issued is run of the mill the VOA will try to do a desk valuation.
The Executors can do the same using something like Zoopla to access the Land Registry values.
You can put your case for a lower valuation, just as the VOA can maintain a higher valuation (does any of the real estate have re-development potential ?!!)
In my experience of three estates, the VOA can be tough and effective - you can try and "pull the wool" but don't expect any sympathy. If the property could be sold tomorrow at auction then that is its valuation.
As property appears to be falling in value at the moment you could find yourselves paying more in tax than you would if you were to sell and substitute the sale value in the calculation.

annie_cardiff

Hi all, my mum died 4 years ago and left very little money,no will, so all went to my Dad, when he dies will he still be entitled to her allowance of £325.000 inheritance tax plus his own therefore making it £650.000 total before IHT comes into play ?

yelf

annie_cardiff wrote: »

Hi all, my mum died 4 years ago and left very little money,no will, so all went to my Dad, when he dies will he still be entitled to her allowance of £325.000 inheritance tax plus his own therefore making it £650.000 total before IHT comes into play ?

Yes he will

yelf

Banton wrote: »

was really hoping there was a legal loophole or process that we could go through to reduce the total IHT bill.

No there isn't

System

If either of the other 2 of those beneficiaries then later on (but within 2 years) wish to do likewise with their own share, they themselves can also execute a deed of variation.

.[/QUOTE]


I think you can only have one DOV per will.

System

harryhound wrote: »

Beware of the interaction between capital gains tax, income tax and inheritance tax;

Also aware of the fact that IHT is based on beneficial ownership, not legal ownership. So if you give away half your house but continue to live in it, it is still regarded as part of your estate for IHT purposes.
There are ways round that, with trusts etc, but be careful you don't avoid IHT merely to be caught by CGT.
As harryhound says, this is very complicated and you need proper advice from a specialist solicitor.

johnjrcar

I have read in the recent ‘Money Weekly’ that there are to be changes to the inheritance tax from April, whereas all assets, regardless of allowance, are to be taxed at 40%. Is this a bit of scaremongering, or will this new tax be imposed shortly?

Anyone help?