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

haradoka

Yes, I agree.

cat_owner

I can see that IHT is £325000. £65000 for a married couple.thats ok when a property is envolved. But what happens to a devorcee who wants to leave her house to an only daughter who lives with me permanently and grand child, Will that mean that my daughter will have to pay IHT on anything over £325000. because im not married any more. cant see thats very fair. should we become tenents in comon.

John_Pierpoint

haradoka wrote: »

My father believes that he will be able to avoid inheritance tax on his financial assets over £325K by opening separate joint bank accounts with my brother and I. (We are the only family members who stand to inherit.) He thinks that when he dies, the money in either account will simply pass to the surviving joint account holder and not be liable for tax. Is this correct?
Thanks in advance for any comment.

How old is father? What happened to mother?

Would it not make more sense to give away the £6k + £3k +£3k............. annual gift allowance?

It seems that he does not fully trust you (and your spouse?) and is trying to retain control - officially he should set up a trust and hope to live 7 years.

Methinks there will be quite a few bank-of-mum-and-dad loan agreements being put through a death bed shredder in years to come.

jem16 wrote: »

Are you planning to commit tax evasion which is illegal?

Banks will not normally release funds until death certificates and, if necessary, probate has been sorted. Anything done before that is committing fraud.

I had a joint building society account with A.N.Other, whose executor did not even inform me of the death. I invested £7 in obtaining a copy of the death certificate.

Then I sent the certificate to the BS and they simply took the second name off the account. Admittedly there was only about £1,000 in the account.

Perhaps it makes a difference, who is first named on the account?

John_Pierpoint

cat_owner wrote: »

I can see that IHT is £325000. £65000 for a married couple.thats ok when a property is envolved. But what happens to a devorcee who wants to leave her house to an only daughter who lives with me permanently and grand child, Will that mean that my daughter will have to pay IHT on anything over £325000. because im not married any more. cant see thats very fair. should we become tenents in common.

IHT is intended to cream off 40% of intergenerational wealth transfers - that includes all land and property.

Your daughter could be forced to move somewhere cheaper.

You might be able to organise a marriage of convenience, but beware of a Muslim with 3 wives already.

Such a simple idea. Such a complex outcome:

http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm43000.htm

You can transfer half the house to your daughter but there is no tax saving on the first £325K of accumulated gifts until a full 7 years after the gift.

I have no knowledge of your daughter's personal financial circumstances, but perhaps giving half the house to her might protect half of it from care home fees?

claire21

Anyone using the "2 year rule" for IHT planning?

JamieSeal

Silver River Productions are looking for families faced with the prospect of paying Inheritance Tax for a brand new television series.

The issue of Inheritance Tax has become relevant to many more people in the past decade. Until relatively recently, it was seen as a tax on the rich. Now, largely due to the exponential rise in property prices, many middle class families are also falling into the net.

If you are concerned about future taxation on your assets and the way it might affect your family’s future, we’d like to speak with you.

Please contact Jamie.seal@silverriver.tv or call 020 7307 2720 to find out more.

John_Pierpoint

Make sure you go to the right studio on the right day:D

http://www.silverriver.tv/in-production/

David_Spruce

My father plans to gift my sister and I £100K each. I understand that this is subject to inheritance tax if he were to die within 7 years. But I am not clear if I need to declare this gift on my self assessment?

And if so will the HMRC tax me on it as income for the tax year in which it was received?

kidmugsy

No declaration required, no income tax to pay. I suggest that you ask your father to write you a letter stating that the money is a gift, and that you and he keep copies on file.

Shed_Head

Hello to all,

Just been scanning through the pages, as I have a situation which I need advice on. My Dad has an estate valued at around £460K. The biggest part of this is of course his home, valued at around £300k.
Which is the best direction for us to start looking at reducing his IHT liability? My dad has reached the tender age of 80, and his health is not to bad.
I have looked at gifting the first £3k which we could for this, and next tax year, but what next? Dad has several investments which have reached maturity and remain invested (bonds) would it be best to cash them in and make lifetime gifts now?

Will a financial adviser be the way to go? I don't see what they can do in particular, would a tax specialist be better?

Any advice would be welcome.