Rationalising recently deceased parents investments

Rodders2409

Hello All,

Not sure if this is the correct place to post...if not could someone point me in the right direction, many thanks!

Sadly, mum recently passed away and dad is now looking to sort things out financially. I've had great feedback in the past from this site so thought I'd enquire on the variables we have in front of us with some better informed folks.

They have a shared bank account that will be fairly easy to manage through, and will act as dads main account going forward.

In addition there are a number of investments to consider which dad is suggesting he just 'cashes in' and passes the monies on to my brother and I. However, I think this needs some thought with regards to tax etc..

The Investments are in a number of places...
NS&I - Bonds / Savings / Premium bonds
Prudential - With profits fund
Halifax - ISAs
Nationwide - ISAs

...they all need checking but probably come to a total of about £350K.
In addition, valuation on the house is £350-380K.

Obviously, dad will be living at home for the foreseeable future, but what would are the things to consider when looking at the initial investments, and then latterly the home when that comes to pass, with regards to tax efficiency etc...

Many thanks for any pointers.

trailingspouse

Sorry for your loss.

Assuming your father is quite elderly, both you and he need to be aware of 'deprivation of assets'. In other words, if he gives money away to you which he later needs to provide for his care, it's possible the authorities will come to you for the money.

Often elderly parents are keen to give large gifts to their children. This is understandable, but not always wise. To be blunt, if he dies without needing to go into a care home, all his capital will come to you anyway. If he needs to go into care then he will need his capital to pay for it - so either way he should hang on to it.

Why do the investments need to be moved? If they were in a reasonable place before your mother passed away, presumably they are still in a reasonable place now. The only ones you might need to think about are ones that were in your mother's name only.

Keep_pedalling

If your mother left the bulk of estate to your father there are no tax issues to consider as the combined nil rates leave his estate well outside IHT territory.

Although I would not recommend him giving the bulk of his savings away, it would not count as DOA as far as residential care is concerned as he would still have the house to pay for that, but it could apply for home care if he did not have sufficient income to pay for that.

It seems most of his savings are in cash, which is going to be eroded over the coming years by inflation, so yes I would look at reviewing those, and probable with an IFA for that sort of sum.

Rodders2409

Thanks Trailing & Keep,

There are a few investments that are in mums sole name, and dad as the main beneficiary, maybe has the option to keep them going I guess or cash them in...is that correct?

If he does cash them in then he could re-invest somewhere else or decide to pass on the monies to my brother and I. However I get the point with ongoing care costs and the potential for challenges to the final estate if he needs major care in the future.

That said I would have thought that the house would cover that eventuality.

My concerns were based around any tax implications should he decide he'd prefer to pass on mum's sole investments to us both. (approx total £100K).

martinsurrey

trailingspouse wrote: »

Assuming your father is quite elderly, both you and he need to be aware of 'deprivation of assets'. In other words, if he gives money away to you which he later needs to provide for his care, it's possible the authorities will come to you for the money.

Deprivation of assets is often thrown around, but is rarely understood.

The authorities can ONLY consider a gift to be a deprivation of assets if at the time of the gift the giver had an immediate foreseeable need for care.

just getting older isn't a foreseeable need, so unless the OP's father has, and knows about, some specific ailment that means care WILL be needed in the short term, he can do as he wants with his money.

Linton

Even if there isnt DoA extra money for later old age shouldnt be given away too readily. Most people dont go into care homes. What is far more common is to have care in one's own home. Council home care can be quite restricted. If one has the money one can choose exactly the care one needs and with luck avoid going into a care home at all.

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


Your mother's will left the assets in her sole name to your father?

Does he wish to consider a Deed of Variation so that they pass to you and your brother instead?

Robin9

Premium Bonds have to be cashed in.

Rodders2409

Thanks to all for the info so far...

It seems that DOA may not be a fasctor then, as Dad is old but quite able to look after himself as far as we can see at the moment.

Therefore, if he chooses to close mums (only) investments and pass the proceeds on to us then he's OK to do so without penalty to himself or to us, through any form of taxation....is that correct?

If we wanted to, we could put the funds directly into our pensions etc...?

To complete the questions, without wanting to tempt fate, is any of my Dads estate (now) eligible for inheritance tax as it stands today (approx values above in previous post) or would we be liable for Capital Gains Tax once his estate passed over?

Thanks.

getmore4less

Robin9 wrote: »

Premium Bonds have to be cashed in.

They(mums) can be held for a year collecting prizes.

getmore4less

In many cases a DOV away from a spouse is not the right thing to do as this just reduces the transferable nil rate band.

A PET is often better as it has a chance of dropping off the estate if the survivor lasts 7 years.

As the current total estate includes a substantial property element it is in the range(close enough to £1m) where some IHT planning across multiple generations should be considered.


You need to consider capital/investments along side the income stream.