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

John_Pierpoint

Inheritance_worry wrote: »

Hi I have left my house half to my wife and a quarter each to my sons the house is worthy£550.000 so my wife's share is £275 and my sons share is 275 split between them will they have to pay any inheritance tax ???

In a word no.

HOWEVER they may well have to pay Capital Gains Tax in the future (currently probably 28% of the increase) if they do not live in the family home with their mum. [Once upon a time son's and daughters were allowed to keep their widowed mum in a tax free house - but your government now needs the tax, to pay the interest on the massive mortgage, it has raised against all our futures].

If you are concerned that your wife might be years younger than you and remarry, thus risking spreading her share to the relatives of her toy boy new husband as well as the cats' home , then leave her a life interest (aka an interest-in-possession-trust).

[The issue of care home fees has a huge thread of its own].

Only you can hazard a guess of your wife's mental state in her dotage and her ongoing relationship with the women who your sons might or might not have married, let alone the possible grand child situation.

Nobody takes their inheritance with them when they go.

It really requires a full fact find before anyone can begin to answer your simplistic question.

http://www.amazon.co.uk/Giving-Inheriting-Which-Essential-Guides/dp/1844901181

holly_hobby

Inheritance_worry wrote: »

Hi I have left my house half to my wife and a quarter each to my sons the house is worthy£550.000 so my wife's share is £275 and my sons share is 275 split between them will they have to pay any inheritance tax ???

Wife - no IHT between spouses regardless of value of net estate

Issue (children) - yes if your net estate on death (inc non-exempt gifts) exceeds the nil rate band (currently 325k assuming you don't have any pre-deceased spouse(s) with unused IHT exemption that may be added to your own upon your executors request to HMRC)

What is the reason for not leaving your entire estate to your spouse on death, and then her distributing to issue on her passing.

Because in doing so, if you pre-decease her with your full IHT exemption in tact, her estate on death (by having your IHT allowance added to hers by HMRC application) will have double the IHT nil rate exemption (which on todays figs woulde be a net estate of 650k).

Have you had a chat with a HNW or tax adviser ?

Hope this helps

Holly

susyrosy

Hi

I've recently discovered my house is worth more than the inheritance tax level. It's the only asset I have. I'm divorced, aged 66, with four children, who I wish to inherit equally. I've made a will to that effect. I would prefer to avoid paying IHT, but I don't want to sell the house unless I have to. My son lives with me - if he continues to do so, will this affect IHT if I die while he's still living here? I'd like to consult an expert, but I don't know how to find someone.

Help, please!

kingsix

Firstly,If I have made a mistake in where this is posted,I am sorry.
I have a query about a will, do I post it here?!

Mojisola

kingsix wrote: »

Firstly,If I have made a mistake in where this is posted,I am sorry.
I have a query about a will, do I post it here?!

Start a new post on this board -
http://forums.moneysavingexpert.com/forumdisplay.php?f=217

holly_hobby

susyrosy wrote: »

Hi

I've recently discovered my house is worth more than the inheritance tax level. It's the only asset I have. I'm divorced, aged 66, with four children, who I wish to inherit equally. I've made a will to that effect. I would prefer to avoid paying IHT, but I don't want to sell the house unless I have to. My son lives with me - if he continues to do so, will this affect IHT if I die while he's still living here? I'd like to consult an expert, but I don't know how to find someone.

Help, please!

What is the value of your house ?

What is the value of your other assets (ie any art works, jewellery, investments, other properties etc) ?

Do you have any outstanding mortgage on the property ?

Do you have any other debts that will be settled from your estate ?

Do you have life cover (ie for funeral provision) ?

Do you have substantial capital on depsoit (ie savings) ?


Bit more meat on the bones re answers to the above, before any relevant comment can be made.

Hope this helps

Holly xx

Create55

We have recently been told that we have missed the deadline to take advantage of the nil band threshold that passed between my parents who are now both deceased. Does anyone know about this deadline?

Many thanks.

holly_hobby

Within 24 mths of death of surviving spouse, appilcation made by the executor/administrator.

Refer to step 3 of the attached (which also discusses the process in general) ...
http://www.hmrc.gov.uk/inheritancetax/intro/transfer-threshold.htm

Hope this helps

Holly

doyleuk

Afternoon All.

Ive got a bit of a complex situation to explain first of all.

My mother-in-law owns 4 poperties, 3 older children who each live in one of these properties and she lives in the remaining one. She has another rental property which she says the title deeds are in her 3 kids + my name(s). In total the 4 houses in her name will be close to the IHT limit of £350k.

My wife and I are looking to purchase a house and move out "our" home, My mother-in-law would then move into "our" home (which she owns and deeds are in her name) and then sell her current residence and gift use the money from the sale to put towards our mortgage.

Can anyone please advise if there are any tax implications either capital gains or inheritance tax that we may be eligible for or is there any way to minimise the impact.

Any help is appreciated...Ive been looking at numerous website include gov.uk to try and understand our unique situation..Im getting a little lost.

Cheers

holly_hobby

doyleuk wrote: »

Afternoon All.

Ive got a bit of a complex situation to explain first of all.

My mother-in-law owns 4 poperties, 3 older children who each live in one of these properties and she lives in the remaining one. She has another rental property which she says the title deeds are in her 3 kids + my name(s). In total the 4 houses in her name will be close to the IHT limit of £350k.

The current nil rate IHT exemption is 325k pp - or upto *650k if there is a pre-deceased spouse in the background, and relates to the value of the deceaseds NET estate (ie after discharge of all debts). *this is available following HMRC application by the executor of MILs estate on her death - and for use, must be nominated within 24 mths of MILS death, after which its lost.

doyleuk wrote: »

My wife and I are looking to purchase a house and move out "our" home, My mother-in-law would then move into "our" home (which she owns and deeds are in her name) and then sell her current residence and gift use the money from the sale to put towards our mortgage.

Can anyone please advise if there are any tax implications either capital gains or inheritance tax that we may be eligible for or is there any way to minimise the impact.

Ok she owns the house she'll move into so no probs there.

The monetary gift from MIL will be classed as a Potentially Exempt Transfer (PET). If MIL retains no benefit from the gifted capital (ie you don't pay her rent etc, nothing in her name, she won't have her own room she can reside in when she wants), and if she survives 7 yrs post donation, it will NOT form part of her estate on death at point, and will be classified as an exempt gift.

If she dies within 7 yrs of the donation, then the amount of gift is included within the valuation of her estate, and yes if the NET (of commitments) value of her estate exceeds available nil rate exemptions (which coudl be upto 650k if there is a deceased spouse in the background), there will be IHT on the excess.

There are various ways to plan an estate to mitigate IHT exposure, and various vehicles effected to meet IHT liability, from level term assurance policies to gift inter vivos plans for PETs.

If such provision is needed, you need to speak to an IFA, whom should be aware of how to manage the issues and which best serving provision should be effected.

I should also mention that the gifted monies will affect any application for MILs state funded long term (not pallative) care, but really from what I've read, she won't qualify anyway.

And lastly, in respect of you and wife being party (with other siblings) to another property (rented), this will need to be disclosed within any mge application as a retained property - if its not mortgaged no probs (apart from possible LTV restriction to 85% or less) , BUT if it is mortgaged then there may also be an affordability issue depending on the figs, and if its set aside or not - your mge adviser will expand further on this area for you.

Lot to consider

Hope this helps get the ball rolling for you to visit your own mge adviser, IFA and/or tax practitioner.

Best of luck

Holly x