Can my elderly parents give our children spare cash, tax-free?

g4efe

I feel sure this would have been asked before but can't find it here...

My parents (92 and 86) are downsizing so they'll have 100K or so sitting in their bank account.

When they finally pass, their joint estate will be worth well under the £625K tax-free threshold for Inheritance Tax (probably £400K, even if they keep their 'downsizing bounty').

What they'd like to know is if they can give away some or all of that spare £100K now, to us or our kids, without falling foul of the taxman, given that they probably won't be around in 7 years.

Any help appreciated - Martin

xylophone

https://www.gov.uk/government/publications/inheritance-tax-main-residence-nil-rate-band-and-the-existing-nil-rate-band/inheritance-tax-main-residence-nil-rate-band-and-the-existing-nil-rate-band

https://www.gov.uk/inheritance-tax/overview

The question here seems to be less about IHT than the possibility of "Deprivation of Assets" should either of your parents need to go into care.

http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS40_deprivation_of_assets_in_the_means_test_for_care_home_provision_fcs.pdf?dtrk=true



Other thoughts:-

Presumably your parents own their new home as tenants-in-common, have their savings etc in sole accounts ( apart from a joint account from which all "household" direct direct debits are paid)?

They have each made a will?

Is POA in place for both, just in case?

teddysmum

If one parent dies and the other goes into care, the house and some savings, plus pensions may well cover care costs, but if one goes into care and the other stays at home, the house is not considered, so the remaining savings and pension may not cover the costs, whereas things would have been fine had they not given money away.


In the latter, case the person in care could have their assets investigated and be penalised for giving money away (deprivation of assets), by being considered to still possess that money, so not in need of State help.