Deed of variation to avoid future IHT

Dubbly

**Please ignore.. re-posted in Deaths and Probate forum******

My wife is due an inheritance approaching 6 figures. As a couple our assets already exceed the £650K limit so we'd like to alter the will by deed of variation so one of our sons gets the money and we avoid any possible IHT on our estate due to this inheritance should anything happen in the next 7 years. We don't meed any of the money in either short or long term so it's a genuine 'gift'. Is deed of variation the best route to take ?

getmore4less

A deed of variation does not alter a will.
It documents the gift in a way that treats it as if the gift had been made by the testator for certain taxation events.
To be valid for the tax mitigation it needs to be written correctly.
Take advice and get it done properly.
Most likely it will be the best option for now but does need to be looked at in the full context of multi generation tax planning, there may be alternative options like a trust that are more effective long term.

onlyroz

Why do you care about inheritance tax when you'll be dead? Dead people don't need money, and your son will hardly be hard up if he's already going to get more than £650k (assuming that it isn't spent on care-home fees in the mean-time).

2010

Give him the money now hope you both live for another seven years.

AylesburyDuck

Probably not going to be a popular post, but, god i hate tax dodgers.:(

Kynthia

AylesburyDuck wrote: »

Probably not going to be a popular post, but, god i hate tax dodgers.:(

Ridiculous. Planning better using legal means to reduce your tax bill is not dodging tax. Tax was paid on the income earnt, the purchase of most homes and the interest on the savings, why should more be spent unecessarily when there are deliberate ways and means in existance as opposed to loopholes? Saying this planning is dodging is like saying ISAs, childcare vouchers, paying a pension through salary sacrifice is dodging.

AylesburyDuck

Cant help the way i feel unfortunately, maybe the use of the word avoid caused that.

Kynthia

AylesburyDuck wrote: »

Cant help the way i feel unfortunately, maybe the use of the word avoid caused that.

I feel people who make these sweeping statements are probably doing other things to reduce their tax but for some reason don't consider them the same. It's just a form of disliking anyone they consider being 'well off'. Avoidance is legal, evasion isn't so I could understand an aversion to the word evade.

Honestly would you or do you use an ISA, buy childcare vouchers, salary sacrifice, a work scheme like 'cycle to work' or a season ticket loan, putting a asset/rental property in joint names to double the CGT exemption, salary sacrifice to pay for work shares or you work pension (you're even avoiding NI with them), transfer of some of a low/non working spouse's tax allowance, etc? Even a private pension and gift aid to charity mean less tax going to the government. Gifting money now rather than waiting until you die, or asking someone to leave their inheritance direct to your children instead of you is no different.

I can understand not liking loopholes or scams or non - declaration. Before stamp duty changed people would try and get a property price under the next threshold by saying thousands were for furniture being left behind, that wasn't really worth that amount. Or people lying about which home was their main residence to avoid CGT or in order to make out a tenant was really a lodger. So many don't declare rent because they say they make no profit, when in fact the repayment part of their mortgage isn't an allowable deduction so they are making a taxable profit. So the thing is to have enough knowledge to distinguish between sensible tax/financial planning and doing something dodgy.

AylesburyDuck

Kynthia wrote: »

I feel people who make these sweeping statements are probably doing other things to reduce their tax but for some reason don't consider them the same. It's just a form of disliking anyone they consider being 'well off'. Avoidance is legal, evasion isn't so I could understand an aversion to the word evade.

Honestly would you or do you use an ISA, buy childcare vouchers, salary sacrifice, a work scheme like 'cycle to work' or a season ticket loan, putting a asset/rental property in joint names to double the CGT exemption, salary sacrifice to pay for work shares or you work pension (you're even avoiding NI with them), transfer of some of a low/non working spouse's tax allowance, etc? Even a private pension and gift aid to charity mean less tax going to the government. Gifting money now rather than waiting until you die, or asking someone to leave their inheritance direct to your children instead of you is no different.

I can understand not liking loopholes or scams or non - declaration. Before stamp duty changed people would try and get a property price under the next threshold by saying thousands were for furniture being left behind, that wasn't really worth that amount. Or people lying about which home was their main residence to avoid CGT or in order to make out a tenant was really a lodger. So many don't declare rent because they say they make no profit, when in fact the repayment part of their mortgage isn't an allowable deduction so they are making a taxable profit. So the thing is to have enough knowledge to distinguish between sensible tax/financial planning and doing something dodgy.

Excuse me :eek: You know nothing of my finances and are in fact very wrong.:eek: How rude.
Now i realise you dislike my comment, you've made that plain, but i am allowed to have an opinion wether you like it or not.

Kynthia

I haven't said I know of your finances, I just said what I feel like you did. Is it not rude to accuse people of trying not to pay their taxes as I pointed out similar and comparable tax reduction methods that the majority use and don't have a problem with? For some reason inheritance tax planning is wrong to you but you havent said say why? Why does that form of financial planning feel wrong to you?

I don't think I'll post again as I don't want an escalation, I was hoping for discussion .

onlyroz

Kynthia wrote: »

Ridiculous. Planning better using legal means to reduce your tax bill is not dodging tax. Tax was paid on the income earnt, the purchase of most homes and the interest on the savings, why should more be spent unecessarily when there are deliberate ways and means in existance as opposed to loopholes? Saying this planning is dodging is like saying ISAs, childcare vouchers, paying a pension through salary sacrifice is dodging.

Most of the "income" here is likely due to house price inflation, which for many amounts to a tax free bonanza when dear old mum and dad pass on.