Ways To Reduce IHT - Adding Daughter To Deeds?

Emmia

pphillips said:

Emmia said:

Your son could still make a claim, even if you have a will - I'd discuss this with the solicitor, would you make a token (£100? £1000?)  bequest to reduce the risk of a successful challenge against your daughter.

I don't see how a token gift reduces the risk of a successful challenge.

Potentially by demonstrating that she hasn't "forgotten" as he was included (albeit in a token way)  - the OP does need.to cover this with the solicitor though.

pphillips

Emmia said:

pphillips said:

Emmia said:

Your son could still make a claim, even if you have a will - I'd discuss this with the solicitor, would you make a token (£100? £1000?)  bequest to reduce the risk of a successful challenge against your daughter.

I don't see how a token gift reduces the risk of a successful challenge.

Potentially by demonstrating that she hasn't "forgotten" as he was included (albeit in a token way)  - the OP does need.to cover this with the solicitor though.

I see what you're thinking about a token gift helping to stop the will begin challenged, although it's possible to discount a person by will to show that they haven't been 'forgotten'.

Emmia

pphillips said:

Emmia said:

pphillips said:

Emmia said:

Your son could still make a claim, even if you have a will - I'd discuss this with the solicitor, would you make a token (£100? £1000?)  bequest to reduce the risk of a successful challenge against your daughter.

I don't see how a token gift reduces the risk of a successful challenge.

Potentially by demonstrating that she hasn't "forgotten" as he was included (albeit in a token way)  - the OP does need.to cover this with the solicitor though.

I see what you're thinking about a token gift helping to stop the will begin challenged, although it's possible to discount a person by will to show that they haven't been 'forgotten'.

I think the key point is that the OP should ensure this is properly covered legally - this might involve a small bequest, it might not - I asked the question to hopefully get the OP to think about this question. 

They might also want to think about what would happen in the event of the daughter dying first - what happens to the money/house then? I'm presuming the OP still wouldn't want  their son to inherit?

xylophone

Xylophone's example ignores the annual gift allowance.

For simplicity - but yes, you have "gift allowances" - see  https://www.gov.uk/inheritance-tax/gifts.

For example
You start with £180,000 of savings.  The house is worth £325,000.
You give your daughter £23000.  You use £25,000 on your renovations.  In the next tax year, you give her another £3000.  You fall off the twig.

Your will leaves her the house and your remaining savings. £129,000 +the house. Total  £453,000,

Your executor claims your residence nil rate band and notes that £305,000 of your NRB remains unused - the value of the bequests is less than RNRB + £305,000.

There is no IHT to pay.

xylophone

Another point - unless there is a change of policy, the RNRB is to be index linked from the next tax year.

Re claim against the estate
https://www.mplaw.co.uk/our-services/services-for-individuals/contested-wills-financial-provision/what-does-reasonable-financial-provision-mean

But the OP is going to be engaging a solicitor to draft her will - he should be able to explain the IHT rules and discuss a possible claim by her son.

pphillips

xylophone said:

Xylophone's example ignores the annual gift allowance.

For simplicity - but yes, you have "gift allowances" - see  https://www.gov.uk/inheritance-tax/gifts.

For example
You start with £180,000 of savings.  The house is worth £325,000.
You give your daughter £23000.  You use £25,000 on your renovations.  In the next tax year, you give her another £3000.  You fall off the twig.

Your will leaves her the house and your remaining savings. £129,000 +the house. Total  £453,000,

Your executor claims your residence nil rate band and notes that £305,000 of your NRB remains unused - the value of the bequests is less than RNRB + £305,000.

There is no IHT to pay.

To spice things up a bit more:

15 year before your death you give your daughter £10,000, 5 years before your death you give her another £10,000 + £3000 each tax year, your remaining NRB is £315,000.

10 year before your death you give your daughter £20,000 + £3000 each tax year, your remaining NRB is £325,000.

15 year before your death you give your daughter £10,000, 10 years before your death you give her another £10,000 + £3000 each tax year, your remaining NRB is £325,000.

10 year before your death you give your daughter £10,000, 5 years before your death you give her another £10,000 + £3000 each tax year, the 7 year shadow means your remaining NRB is £305,000.

Jeremy535897

pphillips said:

Emmia said:

Your son could still make a claim, even if you have a will - I'd discuss this with the solicitor, would you make a token (£100? £1000?)  bequest to reduce the risk of a successful challenge against your daughter.

I don't see how a token gift reduces the risk of a successful challenge.

It wouldn't. An English testator of sound mind can leave his assets to anyone he chooses, unless there are people financially dependent upon him. Adult children who are not dependent would normally have no claim, but the matter is not free from doubt. See https://www.haroldbenjamin.com/site/blog/harold-benjamin-blog/can-i-disinherit-my-adult-children

I don't know whether son and daughter talk to each other. They probably wouldn't after OP's death.

Keep_pedalling

When you factor in funeral costs, if the OP died tomorrow there would be no IHT to pay, and she can easily keep it that way by spending some and gifting her annual allowances. The priority now is to get a will in place. She does not want her son to inherit so needs to think about where her estate goes if her daughter dies before her plus all the other what if situations that like most of she has not thought of. 

jumpingjaq

Thank you for all the helpful answers.

I will try to answer some of the points you have raised.

If my daughter were to die, I would want her husband to inherit my estate. 

My daughter and son do not speak to each other, and other than birthday/Christmas cards (which are sent out of a sense of ‘duty’ I suppose), I do not have any contact with my son either. He is not a nice person, and there is a long history of him mistreating me, including threatening behaviour. The last time we saw each other was three years ago at my own mother’s funeral, where we only said a couple of words to each other. 

He has his own home and a well paid job, and is in no way dependent on me. He has no children, but as far as I know has a partner. I do not know if they live together.

I hope that explains why I want to write my will in the way that I do.

 

pphillips

jumpingjaq said:

Thank you for all the helpful answers.

I will try to answer some of the points you have raised.

If my daughter were to die, I would want her husband to inherit my estate. 

My daughter and son do not speak to each other, and other than birthday/Christmas cards (which are sent out of a sense of ‘duty’ I suppose), I do not have any contact with my son either. He is not a nice person, and there is a long history of him mistreating me, including threatening behaviour. The last time we saw each other was three years ago at my own mother’s funeral, where we only said a couple of words to each other. 

He has his own home and a well paid job, and is in no way dependent on me. He has no children, but as far as I know has a partner. I do not know if they live together.

I hope that explains why I want to write my will in the way that I do.

 

If your daughter was to predecease you and she was also a divorcee on her death then I think you'd lose the RNRB unless there was a contingent gift of the property to another direct descendant.