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

cc120

We didn't know that the spouse iht allowance had to be claimed for and now over the 24month period by a year.

Is there anything we can do now?

Any advice appreciated?

mikeypr12

Hope someone can help me.

My stepfather and my mother (Both 85) share a house worth about £200,000 (£100,000 share each) My mother also has a house in her own right, worth about £325,000

My stepfather also has savings of about £12,000 and my mother £17,000

To us all, it seems a little complicated in regard to IHT, and they are worried about the burden of IHT to my brother and myself.

Any advice greatly appreciated.

Mojisola

mikeypr12 wrote: »

My stepfather and my mother (Both 85) share a house worth about £200,000 (£100,000 share each) My mother also has a house in her own right, worth about £325,000

My stepfather also has savings of about £12,000 and my mother £17,000

To us all, it seems a little complicated in regard to IHT, and they are worried about the burden of IHT to my brother and myself.

Any advice greatly appreciated.

Do they have wills? If your mother were to die first and your stepfather died intestate, you would not inherit from him.

csgohan4

Hello,


here s my situation


Both parents still alive and own a house fully of about 250k with no cash reserves.


I am going to plan a will for them both with a standard Tenancy in Common giving me and my wife as well as my parents equal share.


This will reduce the amount needed to pay for care costs in future and hopefully reduce my IHT liability.


Wife doesn't work and earns just over 7.5k a year only.


However I am planning to buy a house in Dec 2015 worth about 200k,


Question:
1: would it be better for me not to have a share in the will to reduce CGT as I am buying a house next year


2: Is there any other efficient ways to reduce IHT you can suggest, much apprecated

dysons

The article says "These rules are backdated - so will apply if your partner died before October 2007...."
My mother is still alive but my father died in 1983. I have heard that there is something about pre-1986 deaths but I cannot find any info on the HMRC site. Can you help please?
Thanks.

uknick

csgohan4 wrote: »

Hello,


here s my situation


Both parents still alive and own a house fully of about 250k with no cash reserves.


I am going to plan a will for them both with a standard Tenancy in Common giving me and my wife as well as my parents equal share.


This will reduce the amount needed to pay for care costs in future and hopefully reduce my IHT liability.


Wife doesn't work and earns just over 7.5k a year only.


However I am planning to buy a house in Dec 2015 worth about 200k,


Question:
1: would it be better for me not to have a share in the will to reduce CGT as I am buying a house next year


2: Is there any other efficient ways to reduce IHT you can suggest, much apprecated

At the moment your parent's estate is well below the current IHT threshold; why are you concerned about IHT?

If you are really doing it for care home fees, why bother?

Current rules don't allow the home to be taken into account if a dependant person is still living there. So, if one of your parents were to go into care the house wouldn't be taken into account if the other continued to live there. If both go into care at the same time, would you need the house proceeds to ensure they are in a home which you are happy with?

Have a look at this article for more information;

http://www.theguardian.com/money/2014/aug/28/tenancy-common-care-home-fee-solution

uknick

dysons wrote: »

The article says "These rules are backdated - so will apply if your partner died before October 2007...."
My mother is still alive but my father died in 1983. I have heard that there is something about pre-1986 deaths but I cannot find any info on the HMRC site. Can you help please?
Thanks.

Does this help?

http://www.hmrc.gov.uk/inheritancetax/intro/transfer-threshold.htm

John_Pierpoint

That is the dumbed down version - HMRC has special rules for the situation where the first-to-die partner was taxed under older forms of death taxation rules such as "death duties" and "capital transfer tax".
Beware of the interplay of capital gains tax and death tax, There used to be concessions for the family home, where the survivor, usually the widow, was supported by the family to continue to live in the family home.

You are currently in a situation of "If you don't feel confused you have obviously not started to understand the situation!"
If you really want to understand the situation you will face when your elderly relatives die, get copies of the forms IHT205 and IHT400 plus its dozen supplementary detail forms and then see if you can fill them in using this as a check list.
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/382051/iht.pdf

Page 13 is your current concern.

Your mother might have her affairs in apple pie order but in your position I would budget at least a person month of your life for dealing with the financial and tax aspects of her death - don't assume that the so called professionals can safely handle everything, how ever much you are paying them.

John_Pierpoint

csgohan4 wrote: »

Hello,


here s my situation


Both parents still alive and own a house fully of about 250k with no cash reserves.


I am going to plan a will for them both with a standard Tenancy in Common giving me and my wife as well as my parents equal share.


This will reduce the amount needed to pay for care costs in future and hopefully reduce my IHT liability.


Wife doesn't work and earns just over 7.5k a year only.


However I am planning to buy a house in Dec 2015 worth about 200k,


Question:
1: would it be better for me not to have a share in the will to reduce CGT as I am buying a house next year


2: Is there any other efficient ways to reduce IHT you can suggest, much apprecated

Giving real estate to someone who does not use it as their principle private residence, just builds up future CGT liabilities.

In my opinion, the sensible thing to do is give the survivor of the first death an interest in possession by will in the property left by the deceased. In every day language that is a life interest in what is left, they get the income (if any) but not the capital. For estates over £250k something like that used to be built into the intestacy rules.

The government has recently changed these rules. largely doing away with the life interest idea - now why would they do that ?

edwinge

You state that on the death of one of two joint tenants (who are not married) and that person does not leave a will, then the surviving family of the deceased have a claim on the property.

This is not correct. In a joint tenancy, each person owns the whole property. If one of you dies the property automatically passes to the other joint tenant(s), which is known legally as the right of survivorship. Also you can’t pass on your ownership of the property in your will.


Best regards