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Passing money to the kids
squarebear99
Posts: 12 Forumite
My mum is 95, alive and kicking, though gets stressed by banking, so my sister takes care of matters. My mum's estate, all in cash, totals £110K, in an account with Co-op Bank (a joint account with my sister).
Recently Co-op wrote to warn her that the financial compensation limit was being reduced from Jan 1 2016 to £75K.
My sister feels we should mitigate risk and reduce the amount of money held at Co-op to £75K, moving the surplus (i.e. £35K) elsewhere, though the last time we did any banking of this sort it caused my mother (and by association my sister and I) months of angst.
So my sister has suggested (because she is joint account holder) moving it to either her own account or my account or transfer some to each of our accounts.
I am uneasy about this from a taxation point of view. Even though my mother's assets fall well within IHT limits I am unclear on the ramifications of £35K disappearing from an old lady's account and what HMRC might make of this.
Can anyone highlight the likely consequences of such an action. If we could help my mum open a second bank account without causing her stress we'd do it in a trice, but it was so bad last time we'd genuinely rather run the risk of Co-op failing than go down that path again.
Recently Co-op wrote to warn her that the financial compensation limit was being reduced from Jan 1 2016 to £75K.
My sister feels we should mitigate risk and reduce the amount of money held at Co-op to £75K, moving the surplus (i.e. £35K) elsewhere, though the last time we did any banking of this sort it caused my mother (and by association my sister and I) months of angst.
So my sister has suggested (because she is joint account holder) moving it to either her own account or my account or transfer some to each of our accounts.
I am uneasy about this from a taxation point of view. Even though my mother's assets fall well within IHT limits I am unclear on the ramifications of £35K disappearing from an old lady's account and what HMRC might make of this.
Can anyone highlight the likely consequences of such an action. If we could help my mum open a second bank account without causing her stress we'd do it in a trice, but it was so bad last time we'd genuinely rather run the risk of Co-op failing than go down that path again.
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Comments
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Is she likely to need any of this cash any time soon?
She may as well give some of it away now before she dies and can see the benefit of it sooner rather than later.
HMRC won't care at all. You can give as much money away as you like to anyone you like.
If the money is held in a joint account all the money will go to your sister and your mother's estate will have no value. Do you realize you will have no claim on this money?:footie:
Regular savers earn 6% interest (HSBC, First Direct, M&S) Loans cost 2.9% per year (Nationwide) = FREE money. 0 -
Suppose she needs the money to pay for any future care needs?0
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Is she likely to need any of this cash any time soon?
In practice I think not. Though as her bank balance drops below 75K so we can slowly return the 35K.If the money is held in a joint account all the money will go to your sister and your mother's estate will have no value. Do you realize you will have no claim on this money?
That's good information, thanks. Luckily for me my sister's morals are unimpeachable.0 -
missbiggles1 wrote: »Suppose she needs the money to pay for any future care needs?
Sorry, I should have made clear we aren't planning on spending it. Just holding it. We recognise it is hers, still.0 -
missbiggles1 wrote: »Suppose she needs the money to pay for any future care needs?
I think £75,000 should be enough. The rest can be given away.:footie: Regular savers earn 6% interest (HSBC, First Direct, M&S) Loans cost 2.9% per year (Nationwide) = FREE money. 0 -
AFAIK IT is £75k EACH... so £150k in a joint account. No need to move cash about at all.
http://www.fscs.org.uk/what-we-cover/eligibility-rules/compensation-limits/deposit-limits/
On death of one, ALL monies in the joint account pass the remaining account holder - so it's good your sis is trustworthy.0 -
On death of one, ALL monies in the joint account pass the remaining account holder - so it's good your sis is trustworthy.
It might be better to move half the money into another account where the OP and the Mum are joint account holders - if Mum is happy with that.
Otherwise, the account could be changed so that sister is a signatory on the account - she can manage the account but the money doesn't belong to her.
It's easy to open an online account with a different bank if you're concerned about financial security.
Residential care costs can easily reach £1k a week so she shouldn't give any away.0 -
Lets answer the question.
I am uneasy about this from a taxation point of view. Even though my mother's assets fall well within IHT limits I am unclear on the ramifications of £35K disappearing from an old lady's account and what HMRC might make of this
HMRC won't care, as long as you keep records you can show it is held on trust, you can cover both sides. it stays part of her estate.
This is a case where a joint account really has a sole benificiary so should not pass by survivorship.
(there are allready posts covering this common misunderstanding)0 -
getmore4less wrote: »HMRC won't care
But the DWP might if a claim is later made for benefits.0 -
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