Unmarried with children - no will

securityguy

zagfles wrote: »

If we weren't married, we would need to keep such records. We are, so we don't. Our executors don't need to know about transfers between us or who contributed what to joint assets.

Except back in the real world, no-one does, married or otherwise. The idea that all over the country thirty-ish co-habiting couples, or indeed seventy-ish widows and widowers pooling their assets in old age, are keeping detailed records of their finances on the offchance that one of them dies is laughable. They don't, and it's only in the fantasy world of MSE that people even think about it being a thing, still less do it. And still, when they die or divorce, the world continues to turn.

Most people, most of the time, do not have detailed records of financial transactions within relationships and certainly do not have what in commercial terms would be statements of source and application of funds. Why would they? Whoever told them to? What are the penalties for not keeping them? What formats, what information, what storage medium?

Most people, most of the time, do not have detailed records of financial transactions and certainly do not have what in commercial terms would be statements of source and application of funds. Why would they? Whoever told them to?

Yorkshireman99

I beg to differ. No surprise there then! One of the first things my IFA and solicitor told me was to record all gifts. Any prudent person who is likely to leave an estate of more than the IHT threshold is well advised to do this. This makes their executor's job so much easier. It really is not that difficult to make a spreadsheet record each year and print it out. Then just add it to the file to be handed to the executor in due. You do have such a file don't you? This will enable them to complete the probate application easily and appended copies of the prints should satisfy HMR&C. Simples!

Sea_Shell

Sorry to barge in!!..... @ security guy & yorkshireman.

But is there a monetary amount where a "gift" has to be noted and therefore declared. I know about the £3k rule, but what about lots of smaller 'gifts' that add up to more than £3k.

What of a parent helping their grown up child with Rent/Bills/Car/Holidays or other costs....all gifts, but over the course of a year may add up to more than £3k.

I can see why you wouldn't bother if you knew your estate would be under IHT, but your financial circumstances may change dramatically between now and then (lottery/inheritance)

Be interested to here (both) your thoughts.

Yorkshireman99

Gifts to an individual of up to £250 in any year are exempt. Gifts more than seven years ago are exempt. Gifts paid out of income are exempt. A total of £3,000 per year of all gifts is exempt and this figure does not include the individual £250 amounts. In reality HMR&C are not interested in trivial amounts. What they want to know is if a gift is made to try and avoid future IHT. So if you gave a child £25,000 towards a house deposit from your savings it would need to be recorded. On the other and if you earned £100,000 per year and gave you son a car costing £7,000 for their birthday this would probably be exempt. For the majority of people it really does not matter.

zagfles

securityguy wrote: »

Except back in the real world, no-one does, married or otherwise. The idea that all over the country thirty-ish co-habiting couples, or indeed seventy-ish widows and widowers pooling their assets in old age, are keeping detailed records of their finances on the offchance that one of them dies is laughable. They don't, and it's only in the fantasy world of MSE that people even think about it being a thing, still less do it. And still, when they die or divorce, the world continues to turn.

Most people, most of the time, do not have detailed records of financial transactions within relationships and certainly do not have what in commercial terms would be statements of source and application of funds. Why would they? Whoever told them to? What are the penalties for not keeping them? What formats, what information, what storage medium?

Most people, most of the time, do not have detailed records of financial transactions and certainly do not have what in commercial terms would be statements of source and application of funds. Why would they? Whoever told them to?

Err..read the thread. For probate you need to declare "gifts" over the IHT exemption thresholds (except between spouses). You need to declare how much each individual contributed to jointly owned assets (except between spouses). Have you ever done probate and read the IHT forms?

zagfles

Yorkshireman99 wrote: »

Gifts to an individual of up to £250 in any year are exempt. Gifts more than seven years ago are exempt. Gifts paid out of income are exempt. A total of £3,000 per year of all gifts is exempt and this figure does not include the individual £250 amounts. In reality HMR&C are not interested in trivial amounts. What they want to know is if a gift is made to try and avoid future IHT. So if you gave a child £25,000 towards a house deposit from your savings it would need to be recorded. On the other and if you earned £100,000 per year and gave you son a car costing £7,000 for their birthday this would probably be exempt. For the majority of people it really does not matter.

Possibly - as gifts "out of income" don't need to be declared - see https://www.gov.uk/inheritance-tax/gifts for a basic guide.

But significant gifts between unmarried couples do need to be declared - this could apply to couples simply shuffling money around between them or eg using one's savings to buy a significant item for the other (eg a car).

securityguy

zagfles wrote: »

Err..read the thread. For probate you need to declare "gifts" over the IHT exemption thresholds (except between spouses). You need to declare how much each individual contributed to jointly owned assets (except between spouses). Have you ever done probate and read the IHT forms?

You can "need" all you like. As a statement of fact, if someone in their thirties or forties dies unmarried, the chances of there being seven years' records of the details of an unmarried couple's finances are approximately zero. People simply do not keep the records that you describe, and are under no obligation to do so. What you need on a probate form is besides the point: in life, the maintenance of such records is not an obligation.

Yorkshireman99

zagfles wrote: »

Possibly - as gifts "out of income" don't need to be declared - see https://www.gov.uk/inheritance-tax/gifts for a basic guide.

But significant gifts between unmarried couples do need to be declared - this could apply to couples simply shuffling money around between them or eg using one's savings to buy a significant item for the other (eg a car).

It is important to keep a record of gifts because nobody can be sure of their financial position seven years ahead. Whilst gifts out of income don't have to be declared it is nonetheless prudent to keep a list in case HMR&C ask questions. later Trying to asnwer them without a list can be a nightmare for executors.

securityguy

zagfles wrote: »

Possibly - as gifts "out of income" don't need to be declared - see https://www.gov.uk/inheritance-tax/gifts for a basic guide.

But significant gifts between unmarried couples do need to be declared - this could apply to couples simply shuffling money around between them or eg using one's savings to buy a significant item for the other (eg a car).

"Shuffling money around between them" may require a rather subtle understanding of beneficial ownership, of course. You can't hold ISAs in joint names, for example.

If you're an unmarried couple with sufficient assets that you are individually liable for IHT (assuming that the house sits outside the as joint tenants) then you almost certainly buy cars and holiday out of income.

If it came to it, the tax man would, if suspicious, have to prove his case by looking at 7 years' bank statements and asking "what was this transfer".

A lot of couples, married and unmarried, pay money monthly into a joint account and everything then flows out from there. Proving who paid for what is simply impossible in such situations.

zagfles

securityguy wrote: »

You can "need" all you like. As a statement of fact, if someone in their thirties or forties dies unmarried, the chances of there being seven years' records of the details of an unmarried couple's finances are approximately zero. People simply do not keep the records that you describe, and are under no obligation to do so. What you need on a probate form is besides the point: in life, the maintenance of such records is not an obligation.

Well they're going have problems applying for probate then, aren't they.

Getting married solves a lot of these problems.