Confused re Inheirtance tax

maisie1234

Hi All, my father is 85 so has left it very late. He is single, divorced my mother many years ago so only one set of allowances overall.


HMRC did confirm that despite the fact he wont own a house when he passes away he has gone into care and left all his assets to his children hence the reason why I can claim the house allowance

SeniorSam

From an insurance point, if he gifts, the insurance will only need to go beyond 3 years to have some benefit from gifting. On a decreasing term for 7 years, (3 years level amount of the tax that would be charged and then decreasing) . Worth getting a quote perhaps?

maisie1234

Hi All, I am exploring life insurance through an IFA for my 85 year old father. A quote has come up for effectively £400k worth of cover for £1500 per month which will assist with the IRT tax. Are the medicals very onerous? Surely they don't expect an 85 year old to be in excellent health. I wonder if there will be lots of medical caveats and exclusions.


He is in reasonable health for his age but had a heart bypass about 12 years ago.

Yorkshireman99

maisie1234 wrote: »

Hi All, I am exploring life insurance through an IFA for my 85 year old father. A quote has come up for effectively £400k worth of cover for £1500 per month which will assist with the IRT tax. Are the medicals very onerous? Surely they don't expect an 85 year old to be in excellent health. I wonder if there will be lots of medical caveats and exclusions.


He is in reasonable health for his age but had a heart bypass about 12 years ago.

Don’t touch them with a barge pole. Lots of IFA sharks around. Go to a solicitor who is a STEP member. He will be a much better choice.

Keep_pedalling

Yorkshireman99 wrote: »

Don’t touch them with a barge pole. Lots of IFA sharks around. Go to a solicitor who is a STEP member. He will be a much better choice.

As someone who uses an IFA I cannot agree with this statement. Yes there are sharks out there but most of them are FAs rather than IFAs. An estate that has a potential £400k IHT liability should be looked at by a financial expert, solicitors are rarely such beasts.

Those monthly charges are certainly very high but I am surprised an 85 year old is actually being offered a policy at all. We have had a similar policy in place and that particular policy was only offered via IFAs and we could not get something as cheap directly ourselves.

maisie1234

I really don't think a solicitor will have the specialist knowledge for this. Sorry, I didn't make it clear. I am using a IFA. I cannot help thinking that the medical will be the issue although he is in OK health at present

Keep_pedalling

maisie1234 wrote: »

I really don't think a solicitor will have the specialist knowledge for this. Sorry, I didn't make it clear. I am using a IFA. I cannot help thinking that the medical will be the issue although he is in OK health at present

This is a very high risk policy for the insurance company so they are going to want to quantify that risk through a medical and probable will ask for a report from his own GP as well.

These policies are ideal for younger people where the premiums are much lower. We took out a second death policy to cover PET gifts, which will cover £200k of IHT when our average age was 61 and it currently costs us £19 a month, once you get in your 80s the risks to the insurance company are far greater so the premiums sky rocket, and it is more a gamble because if you survive 7 years those premiums are lost, but if you don’t a good chunk of IHT is saved.

I would not worry too much about the medical, worse case scenario is that refuse to provide insurance, which although could result in higher IHT, he still has a good chance of living 7 years in which case you will save on IHT and premiums, even surviving 3-6 years will save IHT as taper relief is going to apply to a gift of £1M.

Tom99

maisie1234 wrote: »

Hi All, I am exploring life insurance through an IFA for my 85 year old father. A quote has come up for effectively £400k worth of cover for £1500 per month which will assist with the IRT tax. Are the medicals very onerous? Surely they don't expect an 85 year old to be in excellent health. I wonder if there will be lots of medical caveats and exclusions.
He is in reasonable health for his age but had a heart bypass about 12 years ago.

£400k cover for £1,500 per month. Your father would be age 107 before the insurance co makes a profit? Maybe £1,500pm is just for the 1st year then it increases.

Keep_pedalling

Tom99 wrote: »

£400k cover for £1,500 per month. Your father would be age 107 before the insurance co makes a profit? Maybe £1,500pm is just for the 1st year then it increases.

These are term policies and will finish after a fixed term (typically 7 years) The £400k cover also probably falls after 3 years as the amount of if IHT on gifts in excess of £325k falls due to taper relief.

If the policy holder survives the full 7 years then there is no payout and the insurance company keep all the premiums, which in this case would amount to £126k over 7 years.

If you are going to gift as part of your IHT planning do not leave it til your 80s to even 70s you will then have few options and those you do have are likely to be very expensive.