transferring inheritance after death

xylophone

The 15 year old cannot have a CTF because they weren't around when he was born. He is therefore eligible for a JISA.

https://www.gov.uk/child-trust-funds/overview

Your mother may contribute to the children's CTF/JISA (as may you without needing to consider the "£100 rule" which does not apply to JISA/CTF).

The CTF may be transferable to the more flexible JISA from April this year.

As a parent, you need to be aware of the "£100 rule" if you have given cash/assets to your children on which income is earned.

http://www.aviva-for-advisers.co.uk/site/public/tech-centre/tech-article-detail/saving-for-children-and-grandchildren

rosyposyjm

Excuse my stupidity...
With the £100 rule (thanks for the link, but it's gone slightly over my head) does that mean that we're ok providing the children's interest on their accounts doesn't go over £100?

They both already have JISA's with £4,ooo in, which I opened earlier this year.

The account that the 15 yr old has is an investment which I pay into monthly and they invest it in stocks and shares (I think) - it was sold to me as a long-term investment.

rosyposyjm

atush wrote: »

Obv the value of the house could go up, but cash is easier to muck abt with.

What other options would she have with cash?

atush

I meant it is easier to move to you than the house etc. as was said in another post above.

I used Witan Jump for all 3 of my boys.

Just get your mother to pay the money into the Jump plan and the Jisa (investments) when it comes up?

xylophone

The £100 rule relates to income earned on money given to their minor unmarried children by parents, whether it arises from deposits or from stocks and shares.

See http://www.cii.co.uk/knowledge/personal-finance/articles/investing-for-children-part-two/27555

"Under section 629 all such income that comes from capital provided for a particular child by a particular parent will be assessed to tax on that donor parent if it exceeds £100 gross in a tax year. Income of £100 gross or less in a tax year would be assessed on the child in the normal way. This legislation is sometimes referred to as the "£100 rule". The impact of section 629 is that when parents make gifts for the benefit of their minor unmarried children or invest in their names, greater care is needed in finding a tax-effective solution."

http://uk.virginmoney.com/virgin/savings/learn/childrens-accounts/


"Most children don’t pay tax, so the interest they receive on any savings will be tax-free.

There are special rules in place with HMRC if the savings have been given by a parent. If gifts from a parent produce more than £100 gross income a year, the whole of the income from the gift is normally taxed as the parent’s income and a child cannot get back any tax on that income. Nor can interest paying accounts be registered to have interest paid without tax taken off. The £100 rule applies separately to each parent. The £100 rule applies to income earned each year and it does not matter whether the fund is comprised of part capital and part added interest. The £100 rule applies as long as income is over £100 in any one year for any one child from one parent."

With regard to a stocks and shares type investment, it might be held in bare trust (therefore owned by the child and a gift to the child) or held by the parent in designation (intended for the child one day but owned by the parent).

For a fuller explanation, see http://www.sit.co.uk/private-investors/products/stockplan-a-flying-start- click on FAQ.

zagfles

rosyposyjm wrote: »

Have visited my mum and here is a breakdown:
shares £33k, bank ac/bonds/isas £350k; house £250k; private pension £7625 p/a before tax; state pension £841 p/m.

We used to have a joint bond of £80,000, but there was a bit of a mix up and when she renewed it, it was solely in her name and they wouldn't change it back to joint as it was a fixed term bond so that was quite annoying. We are planning on opening a new joint ac in december when another bond matures, but am assuming that this will have a seven year "gift" applied to it?

Mum is 67 and fit and healthy.

Think that is all the facts;)

I think she'll want to transfer half the house into my name for her peace of mind to avoid inheritance tax.

Are there any factors we should take into consideration when doing this?
Thank you,

Were your mum and dad married? If so I can't see any particular reason to amend the will to transfer part of the house to you, since your mum inherits your dad's IHT allowance. If she gets everything from your dad, your mum now has a £650k IHT allowance. If you inherit say £100k from your dad, she has a £550k IHT allowance left (since £100k of your dad's is used up on you).

Ask the solicitor - they might be thinking about care home fees or something. But the disadvantage (assuming you don't live in the house) is that you'd have to pay capital gains tax on any increase in the value of your part from when you inherited it to when you sell it.

kidmugsy

Since your mother is healthy, she could easily live another 25 years or longer. It might be worth her taking small actions to avoid IHT which would have a useful cumulative effect. (i) She can give away up to £3k p.a. exempt from IHT. Your children might be suitable beneficiaries of such largesse. (ii) Until she is 75 she can contribute £2880 p.a. to a personal pension of some sort. The tax relief paid to the provider by HMRC makes the capital up to £3600 p.a. Moreover,the money is there for her if ever she wants it back out, while also being exempt from IHT when she dies. Admittedly, no one can guarantee that this situation will last for 25 years, but if the IHT advantage is abolished, she can just take the money out again.

rosyposyjm

kidmugsy wrote: »

(ii) Until she is 75 she can contribute £2880 p.a. to a personal pension of some sort. The tax relief paid to the provider by HMRC makes the capital up to £3600 p.a. Moreover,the money is there for her if ever she wants it back out, while also being exempt from IHT when she dies. Admittedly, no one can guarantee that this situation will last for 25 years, but if the IHT advantage is abolished, she can just take the money out again.

She already has the personal pension that my dad left to her and there is quite a substantial amount in there. Can she just add to that then?
What happens to the amount in the personal pension when she dies - is that classed as part of her estate? Yet exempt from IHT?

rosyposyjm

kidmugsy wrote: »

Since your mother is healthy, she could easily live another 25 years or longer. It might be worth her taking small actions to avoid IHT which would have a useful cumulative effect. (i) She can give away up to £3k p.a. exempt from IHT. Your children might be suitable beneficiaries of such largesse.

So she can give £1500 to each grandchild each year. Is there any way she can give a "one off" larger gift to them? Would that have the seven year clause on it? (Or am I just making things up now)

atush

rosyposyjm wrote: »

She already has the personal pension that my dad left to her and there is quite a substantial amount in there. Can she just add to that then?
What happens to the amount in the personal pension when she dies - is that classed as part of her estate? Yet exempt from IHT?

She could possibly pay into the old PP depending on the status of it (had your father commenced taking his pension and how) or she could put the money into a new PP with the same firm or another.

Depending on if she had commenced or started drawing money on the pension or bought an annuity the money would be passed on outside her estate on death.