transferring inheritance after death

atush

rosyposyjm wrote: »

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)

She can give 3K per annum to each child and anyone else she cares to. She can also give gifts from her income if she has income to spare (incl pension income),

Larger gifts or more than one per year to an individual can trigger the 7 year rule.

xylophone

She can give 3K per annum to each child and anyone else she cares to. She can also give gifts from her income if she has income to spare (incl pension income),

Larger gifts or more than one per year to an individual can trigger the 7 year rule.

Not wholly accurate, I'm afraid.

See https://www.gov.uk/inheritance-tax/gifts

rosyposyjm

Have just had a look at that link - thank you.

Does that mean that with 2 grand children she can give them 1500 each or 3000 each per year?

Also, if she was to pay, say £50 a month into a savings account for the children, is this on top of the payment above and still remains tax-free?

(sorry if I'm being slow!)
Thank you

xylophone

At the moment, and assuming that your mother benefits from your late father's full IHT exemption, her estate seems to be well within the IHT threshold.

https://www.gov.uk/inheritance-tax/leaving-assets-spouse-civil-partner

Regarding cash gifts see

http://www.money.co.uk/article/1004329-how-do-i-gift-money-without-being-taxed.htm

xylophone

At the moment, and assuming that your mother benefits from your late father's full IHT exemption, her estate seems to be well within the IHT threshold.

Correction - I had not included the £20,000 apparently held in her name for your children but which you say you think is not held in bare trust but is "in trust".

What kind of trust is this? Who was the settlor?

Are you able to clarify the status of these accounts?

Does the money belong to your children or to your mother?

How does she appear on the accounts? How are the accounts taxed?

rosyposyjm

It is a 3 year little rock fixed rate bond issue 3 opened in trust for child It says on the top my child's name and then under it my mother's name with (Trustee) in brackets after her name. That is all the information I have. I'm not sure whether the money is my children's or my mother's.
It has actually matured, so I need to do "something" with it. Not sure what! Feel it would be simpler to change the trustee to myself, but need to go into the bank to have a chat with them really.

atush

I would invest it on equities if your child is young, either in a Jisa or IT savings plan. with you as trustee not your mother.

xylophone

In that case it would appear that your mother is holding the accounts in bare trust and the capital and interest belong to the children individually.

Presumably R85s were registered on the accounts? If not, and the children are non-taxpayers, the tax will need to be reclaimed on R40.

It would be possible for you to hold the money in bare trust for the children - you need to decide whether you wish it to be held in cash or investments of some kind.

While you are thinking about the matter, the Nationwide Limited Access Smart Account for each child might be worth considering.

http://www.nationwide.co.uk/products/savings/smart-limited-access/rates-and-information

You might start a JISA for the 15 year old.


You could top up the JISAs in the next tax year. Stocks and shares options are available.

jamesd

rosyposyjm wrote: »

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?

Can she afford to pay you 50% of the market rent for the house starting from then until she dies?

To avoid inheritance tax a gift must be a pure gift. If she gives you half but then wants to live in it rent free it is called "gift with reservation" and doesn't avoid inheritance tax. That's why she would be required to pay you the market rent for the part you own if the purpose was to avoid inheritance tax.

System

jamesd wrote: »

she would be required to pay you the market rent for the part you own .

Which you would have to pay income tax on.