Situation…..., thoughts please

Age 70, 3 sons all 40 odd. All left to them divided by 3. Father recently died £600k to me. My house £150k, left to my 3, so total £750k. I am in ‘good’ health and have looked at lovely houses to buy outright, but my mobility/legs is a problem. I have all I need here/nearby in this house as I grow older. Lovely to have the money from Dad (Mum) but of no ‘real’ use to me now. (Would have been years ago) (cruises/holidays/cars – don’t want/need/got it)). My kids could use it £ NOW

??? Give £500k to them now (£100k left for me as a safety blanket) If I died the next day, they would be liable for IHT at 40% less allowances, so £325 + £150 = £475. Estate is £750 so £750 - £475 = £275 x 40% = £110 div by 3 = £37k. So they sell the house and clear it all.

CGT – no issue…?

Deprivation….. I am in good health, now. ….6 mths time….. I go into a nice/not LA care home. I have £100k + house. = £250k. This lasts say 3 years with house being sold after 1 year to fund. Would they have to find the money to repay any LA funded/future fees after my money runs out? (ie is deprivation a Q after 3 years). I know I would be shifted from somewhere nice to a LA jobby, but would I really care at that stage – or be dead before!?

I have all I need for now/probable future. £100k still a nice ‘buffer’. Won’t be looking at moving/cruises, etc. Can’t see me lasting ‘forever’. Am I looking at this correctly/OK. Why not sort the kids out now… 2 of them looking at moving/extending now – could extend their expectations - nice

Any thoughts/obs welcome please. Strange times.


  • pphillips
    pphillips Posts: 1,631
    First Anniversary First Post Name Dropper
    edited 18 April 2020 at 10:09PM
    Have you thought about doing a deed of variation for your inheritance from your father's estate. As long as the deed of variation is completed within two years of the date of death, for Inheritance Tax purposes, it is treated as if his Will had been re-written immediately before the he passed away. If your father died without leaving a Will, it would be read as if the entitlement under the Rules of Intestacy had been changed. Otherwise, if you just give the money away it could be subject to inheritance tax if you die within 7 years of the gift.
  • I am an inheritance tax specialist with 18 years of experience advising clients but please do not consider this personalized advice as I do not know your circumstance well enough..

    There are a number of possibilities here.
     Are you widowed or divorced? If widowed, then you would probably have your ex husbands allowances in which case no IHT. If divorced, then you now have £325,000 NRB + £175,000 RNRB = £500,000. However to get the RNRB you must still own the house on death or register for a “Downsizing addition “ if you go into care. 
    1. Giving assets away as a lump sum to your children may be a problem as it will probably be seen as “Deprivation of assets”. You should seek advice on this depending on how your care will be funded even if you are not in a LA care home. 
    2. Despite the Deprivation of assets ( DOA) issue you still need to live 7 years if you make a gift over £3000 for that gift to fall outside of your estate for IHT purposes. You need to be confident of that.
    3. If you believe you will not live 7 years a regulated IFA could advise you on a plan or product that attract Business property relief which you only need to hold for 2 years before it is exempt from IHT. Be careful of the investment risk but a good IFA will deal with this properly. 
    4. The best route will probably be to do a deed of Variation of your late fathers Estate if he died less than 2 years ago. This would avoid all the problems as the money goes directly to your sons from his Will rather than come to you. Your justification if you are challenged for the DOA is the IHT issue. Just dont give away too much in case you need it. 
    Mainly seek experienced help and advice to make sure it gets done correctly.
    I hope that helps. 
  • castle96
    castle96 Posts: 2,875
    First Anniversary First Post
    Thanks for that and your time.
    I am single/male. House is only £150k, so £325 NRB + £150 RNRB = £475 yes?
    Does 4.), not negate 2.),ie the 7 year thing. That would be the whole point of doing a DofV (which can apparently just be a detailed letter). This would be a 2nd DofV which HMRC say IS OK
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