Deed of variation to avoid future IHT

Morglin

Dubbly wrote: »

**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 ?

Yes, it can be done.

My uncle left me a very large sum, and I paid the IHT due, but I did a Deed of Variation, to give each if my adult kids an amount, so they wouldn't have to pay the IHT on it again if I left it to them.

I didn't want to gift them the money in case I didn't survive the 7 years required.

Any decent solicitor will do it for you.

Lin

onomatopoeia99

LilElvis wrote: »

It would be interesting to know if those who disagree with financial planning to minimise IHT are likely to be either recipient's of a bequest, or have estates themselves, which would be liable to the tax.

I disagree with IHT in principle as I regard it as a double tax, once when the money was earned, then again when it is bequeathed.

My parents are still living (though they are at an age where I know I'm lucky to still have them), their estate will not be liable for IHT as it is under the threshold for a married couple.

My estate should I die tomorrow is likely to be around the threshold once the mortgage is paid off.

So, neither I nor my beneficiaries would be affected in any substatial way by IHT, but I still believe it to be an iniquitous tax on death.

Keep_pedalling

onomatopoeia99 wrote: »

I disagree with IHT in principle as I regard it as a double tax, once when the money was earned, then again when it is bequeathed.

My parents are still living (though they are at an age where I know I'm lucky to still have them), their estate will not be liable for IHT as it is under the threshold for a married couple.

My estate should I die tomorrow is likely to be around the threshold once the mortgage is paid off.

So, neither I nor my beneficiaries would be affected in any substatial way by IHT, but I still believe it to be an iniquitous tax on death.

Much of people's wealth is not earned, but obtained through house price inflation and inheriting from previous generations, so it is not double taxation. Inheritances are unearned income, so should not simply be left untaxed so that the children of the wealthy can simply live on unearned income.

Our estate is considerably above the nil rate band, and the only reason is through a couple of inheritances and a 8 fold increase in the value of our house, so no hard work required there. We have reduced our liability through gifting, via an insurance policy and actually spending some ourselves, but unless we both spend a good few years in a care home our estate will still pay IHT but we consider that a fair return on being in such a fortunate position.

Primrose

I,m not concerned about the tax avoidance issues but when you mention you would like "one of our sons" to have the money, i wonder if you have thought seriously about the impact this might have on your other children if you don't treat them all equally, even if their financial circumstances might be quite different.

If you don!t want to instigate a possible massive family rift and feud after your deaths, or even before then think seriously about the possible harm your well meaning gesture might so by not treating your children equally.

onlyroz

onomatopoeia99 wrote: »

I disagree with IHT in principle as I regard it as a double tax, once when the money was earned, then again when it is bequeathed.

My parents are still living (though they are at an age where I know I'm lucky to still have them), their estate will not be liable for IHT as it is under the threshold for a married couple.

My estate should I die tomorrow is likely to be around the threshold once the mortgage is paid off.

So, neither I nor my beneficiaries would be affected in any substatial way by IHT, but I still believe it to be an iniquitous tax on death.

How is money from house price inflation (which is where most inheritances usually come from) "earned income"?

LilElvis

onlyroz wrote: »

How is money from house price inflation (which is where most inheritances usually come from) "earned income"?

Is house price inflation actually any different than, say, investing money wisely in the stock market and realising a return? What makes one form of growth acceptable and the other not?

onlyroz

LilElvis wrote: »

Is house price inflation actually any different than, say, investing money wisely in the stock market and realising a return? What makes one form of growth acceptable and the other not?

Stock market gains are subject to capital gains tax, whereas gains from your primary residence are tax free.

Keep_pedalling

LilElvis wrote: »

Is house price inflation actually any different than, say, investing money wisely in the stock market and realising a return? What makes one form of growth acceptable and the other not?

Its nothing to do with acceptability, it's the claim by some that their personal wealth should not be taxed at death because they have have already paid tax on it, which for most people is simply not true.

This seems particularly true of the boomer generation, of which I am one. I never bought my house as an investment, it was bought as a home, and I would have preferred not to see the price of it race away, forcing later generations to leave my town because they are priced out of the market. We are now retired living off our FS pension schemes with enough assets to see us live comfortably into our old age, but I have to put a lot of that down to sheer luck of being born in the right time and place.

EasySolution

If Grandmother had been asked if she preferred to pass her estate to a grandchild free of tax or to pass to him minus 40% we can devine the answer.
There is a perfectly legal way to achieve that.
"A variation to the Will" properly constructed, will do what you want.
Please take proper advice. STEP practitioners are recommended. http://www.step.org/member-directory