Money gift from dad

Charlotte1958

My father has a life limited illness ( cancer ) He wants to give me £20.000 as a thank you for all I do looking after him,  my sister told him this could cause problems after he passed with probate.

I have researched this on line. Tax threshold – currently £325,000. My dad does not have anywhere near that.

I've also read that £3,000 can be gifted tax-free every tax year (6 April – 5 April), or normally a maximum of £6,000 if they had made no gifts the previous year, so that would leave £14.000 open to discussion.

Could you help please, do you know if my dad is allowed to gift me the larger amount please. If he does what sort of if any problems could it course ?

Thanking you in advance

Charlotte

Linton

Your father can give you whatever he wants.  The only issue could be that if he dies within 7 years the gift is effectively regarded as part of his estate and so could be subject to inheritance tax  if the total exceeded £325K.  You say that this wont be the case, so there are no problems.

PS It may be prudent of he puts the gift in writing just to confirm that it is not a loan should there be any questions later.

Mickey666

I think there is also the possibility that the £20k (well, actually only the £14k as the OP is correct about the £3k gift allowances) might have to be repaid IF the father's estate is in debt.
But, assuming the estate is not in debt (ie can pay any outstanding amounts on death) and the total estate value does not exceed £325k then there are no tax implications, either for the OP or for the estate.

Keep_pedalling

Even if his estate was in IHT territory it would not cause any issue at probate as  any tax due would come out of remaining assets. Sounds like sis does not want to see her inheritance reduced by the gift.

getmore4less

Mickey666 said:

I think there is also the possibility that the £20k (well, actually only the £14k as the OP is correct about the £3k gift allowances) might have to be repaid IF the father's estate is in debt.
But, assuming the estate is not in debt (ie can pay any outstanding amounts on death) and the total estate value does not exceed £325k then there are no tax implications, either for the OP or for the estate.

if the money is claimable then it is all claimable.

There is no gift allowance that somehow protects it from claims of deliberate deprivation to avoid debts..

The £3k it is an exemption on gifts under IHT legislation so they don't become a PET 

Mickey666

That's interesting.  But what's the criteria for 'deliberate' deprivation of assets?  Eg, what if there were no debts at the time the gift was made?  

naedanger

Keep_pedalling said:

Sounds like sis does not want to see her inheritance reduced by the gift.

It is certainly a possible motivation. But there does also seem to be quite a common misunderstanding that gifts have some terrible adverse tax implications.

getmore4less

Mickey666 said:

That's interesting.  But what's the criteria for 'deliberate' deprivation of assets?  Eg, what if there were no debts at the time the gift was made?  

Its down to the creditors to make a claim under the relevant legislation for a insolvent debtor(dead or alive).
Even joint assets passing by survivorship are not safe

If it was easy everyone would be doing it if they new they were short for this life.
Take out a load of loans give all you assets away then die.

Have a good read of insolvency legislation

Mickey666

getmore4less said:

Mickey666 said:

That's interesting.  But what's the criteria for 'deliberate' deprivation of assets?  Eg, what if there were no debts at the time the gift was made?  

Its down to the creditors to make a claim under the relevant legislation for a insolvent debtor(dead or alive).
Even joint assets passing by survivorship are not safe

If it was easy everyone would be doing it if they new they were short for this life.
Take out a load of loans give all you assets away then die.

Have a good read of insolvency legislation

Wow - I bet that's a surprise to many people.  Still, as you say, if it was that easy . . . . besides, creditors deserve protection.
I guess the best approach is to avoid insolvency altogether

newatc

Don't know the full family circumstances but there might be merit in Charlotte suggesting to her Dad that he gives the 20k shared among the children. Giving to one might split the family for years to come. We reqularly give money to our children but, unless it is for a specific large reason (new baby, first house etc), we give equal amounts to each and are always transparent to all of them.