How soon to plan for IHT?

sare_2

My parents own 4 houses including their main residence and rent out the remaining three.The value of their estate is around £600K.

As I am their only beneficiary and my own home is one of their rental properties they thought it best to seek advice from an IFA to see how they could minimise the potential IHT bill should anything happen to them.

My father is 58 and my mother 52.The IFA went away for several months and has come back to them and said they shouldn't do anything yet,leave things for a few years and sort things out 'nearer the time'.

I find this a strange comment to make as I would have thought the sooner things were put in order the better.Is 50 odd too young to be planning ?

Robert_Sterling_3

The reason that there is no great urgency concerning IHT is that the law allows you to vary a will provided that it is done within two years of the death of the will maker and the variation has the consent of all parties that are affected by it.

To exploit fully the nil rate band for IHT purposes your parents both need to have a Will otherwise the surviving parent may end up owning all the assets and only one nil rate band will be tax free.  This would make a difference of and additional £100,000 pound to the IHT bill

This is not advice ... It is just what I think

sare_2

Thankyou for replying Robert.

So for example,if my mother survived my father and inherited his estate she could change his will after his death so that I inherited up to the nil rate band?

mary

So for example,if my mother survived my father and inherited his estate she could change his will after his death so that I inherited up to the nil rate band?

I'm no expert but I'm in the 50 something age group and not expecting to move on yet! However, like you I was the only beneficiary of my mother's house last year.
Our house, for Maths sake, is 250,000 and Mum's house is 250,000. I'm looking at the future for our children, not waiting for the No. 79 bus to come along and knock me down prematurely before I've got it all sorted as far as is humanly possible.

A suggestion - your parents make themselves owners in common, as opposed to joint owners and each leave the nil rate band's worth to you, thereby your Dad could take 263,000 worth of property out of the equation and 263,000 likewise your Mum. That would leave 74,000
in the inheritance tax melting pot.

I stand to be corrected?

Robert_Sterling_3

Thankyou for replying Robert.
So for example,if my mother survived my father and inherited his estate she could change his will after his death so that I inherited up to the nil rate band?

Absolutely Right as the law stands now.