Reducing inheritance tax

PaddyLondon

My wife has been managing her mother's £800k savings for the last eight years, with a Power of Attorney. Suffering from dementia, my wife's mother passed away recently, and the time has come to finalize the estate and provide 25% of the post tax estate to each of the brothers and sisters in the family.

I did not know my wife had been managing such a large sum - I remember advising her in 2008 to make sure she had spread the sum around different institutions not realizing how scary my advice would be - but and not appreciate the scale of responsibility and stress she was bearing.

Given the work she has put in with no input from brothers/sisters, and assuming they were content, could she ask the estate for payment for service rendered in over the eight years. Probably comes across as money grubbing, but it would be more tax efficient (and fair), for her to receive a payment, thus reducing the estate's value for tax purposes.

All ideas welcome!

xylophone

Is she the executor of the will?

As far as I know, she can only claim her legitimate expenses?

http://www.lawdonut.co.uk/law/personal-law/probate-executors-and-estate-administration/being-an-executor-or-administrator

As Attorney, she could only have claimed her legitimate expenses.
http://www.ageuk.org.uk/money-matters/legal-issues/powers-of-attorney/powers-of-attorney-faqs/

System

Expenses in connection with probate and executorship are totally different from on-going expenses in managing someone's affairs over 8 years.
A competent person would have been perfectly entitled to pay someone a fee for managing her affairs - or indeed simply make annual gifts if she chose.

I'm not sure whether someone exercising power of attourney is entitled to make such arrangements to her own benefit, nor whether she would be entitled to do so posthumously.
I'd have thought that was unlikely, given the obvious risks of abuse.

tincans6

PaddyLondon wrote: »

All ideas welcome!

Be grateful she is inheriting a large sum, and don't fall out with siblings.

In all families someone thinks they are doing more than their "fair share" in different areas of looking after a parent. That often just the way it falls - sometime by design but often by accident.

She was looking after her mums money at the time not her siblings. Her mum has chosen to split it equally.

It is indeed money grubbing - if her mum was still alive, what hourly rate do you think a daughter should charge as POA ?

troubleinparadise

could she ask the estate for payment for service rendered in over the eight years

Simplistically - no. The role of attorney, along with that of executor, as a layperson is not remunerated, other than simple expenses incurred.

Your thread title is "Reducing Inheritance Tax" - if you are seeking a means that your wife is paid by the estate for her role in order to reduce the amount of money taxed, I'm afraid I think you are out of luck; her mother did not make any provision for such a payment (prior to her death and not in her Will), and I doubt that HMRC would be open to this idea either.

You know her siblings - do you think they would be open to this suggestion?

On the Alzheimer's Society Forum, these uninvolved family members are jokingly referred to as "The Invisibles" - but they always emerge when it comes to money.

You might find that it opens a can of worms whereby close scrutiny of accounts kept over that time as attorney is requested, and family relations destroyed completely.

It may be that your wife just has to accept that she did the right thing by her mother, whether financially recompensed or not, and that she has a clear conscience and can live with her own actions. Her siblings may never have that peace of mind.