Probate Forms – Accounting for Large Cash Gift

Maidavale

I am currently working through the IHT 400 and various additional documents.

In short – my father gave me two cash gifts before his death in December 2018:

• August 2013: £50,000 (5 years ago) – with 5 years taper relief this comes to 60% reduction of IHT rate though I understand it’s not relevant for the below calculation.
• August 2016: £150,000 (2 years ago)

These both went towards my own house deposits.

He also has a house worth £300,000 owned in his sole name which I will shortly be selling.

How should I account for all this on the IHT 435 residence nil band form to optimise IHT (key driver is for as much to come to me as possible / but otherwise to pass to my mother / his wife):

As I calculate it:

£450,000 residence nil band minus £200,000 of gifts means I should note on IHT 435 that I will receive £250,000 or 83% of the house with the remainder going to my mother (which is free of IHT).

This then optimises my usage of the £450,000 given I am forced to account for the £200,000 of gifts within my IHT free allowance.

Have I done this correctly / does this make sense?

getmore4less

Be careful taper relief will not apply it applies to the tax due on the gift not the gift.

Yorkshireman99

Maidavale wrote: »

I am currently working through the IHT 400 and various additional documents.

In short – my father gave me two cash gifts before his death in December 2018:

• August 2013: £50,000 (5 years ago) – with 5 years taper relief this comes to 60% reduction of IHT rate though I understand it’s not relevant for the below calculation.
• August 2016: £150,000 (2 years ago)

These both went towards my own house deposits.

He also has a house worth £300,000 owned in his sole name which I will shortly be selling.

How should I account for all this on the IHT 435 residence nil band form to optimise IHT (key driver is for as much to come to me as possible / but otherwise to pass to my mother / his wife):

As I calculate it:

£450,000 residence nil band minus £200,000 of gifts means I should note on IHT 435 that I will receive £250,000 or 83% of the house with the remainder going to my mother (which is free of IHT).

This then optimises my usage of the £450,000 given I am forced to account for the £200,000 of gifts within my IHT free allowance.

Have I done this correctly / does this make sense?

What does the will, if any, say?

Maidavale

No will was left so as it stands the rules of intestacy apply - though a variation could subsequently be put in place

Keep_pedalling

Is the house you are selling his primary residence?

Yorkshireman99

Maidavale wrote: »

No will was left so as it stands the rules of intestacy apply - though a variation could subsequently be put in place

Well intended as it is, you can’t rely on amateur advice from here.Given the sums involved you need paid for professional help from STEP qualified solicitor as does your mother.

Keep_pedalling

What I don’t understand is why you want the maximum to go to you rather your mother? Unless she has significant other assets of her own why would you want to undermine her security by taking the bulk of your fathers estate.

Maidavale

Correct the property in question is the primary residence.

My mother is getting older and does not want the stress of having the inheritance come to her - she has her own home and pension and a good life and that's enough for her.

Beyond this question I'm comfortable with the rest of the probate forms on my current understanding.

getmore4less

Given you have misunderstood taper relief what else might you have misunderstood?

Yorkshireman99

Maidavale wrote: »

Correct the property in question is the primary residence.

My mother is getting older and does not want the stress of having the inheritance come to her - she has her own home and pension and a good life and that's enough for her.

Beyond this question I'm comfortable with the rest of the probate forms on my current understanding.

Given what you have said I think you need to swallow your pride and recognise that the whole process given the circumstances is full of pitfalls. It could cost you and your mother a whole heap of money. Who is applying for letters of administration? The fees should far out weigh the possible saving in IHT and possible penalties.

Linton

Yorkshireman99 wrote: »

Given what you have said I think you need to swallow your pride and recognise that the whole process given the circumstances is full of pitfalls. It could cost you and your mother a whole heap of money. Who is applying for letters of administration? The fees should far out weigh the possible saving in IHT and possible penalties.

Do you mean the saving in IHT and possible penalties should far outweigh the fees from taking professional advice?