Taxation on a medical negligence claim after probate

PlasticDragon

Hello there, 
Can you help? 
Four years ago, my wife brought a medical negligence claim against the NHS on behalf of her mother.
Six months after the claim was brought, her mother passed away (from the illness the NHS missed some years earlier). 
My wife continued with the claim and, after nearly four years, our representatives have taken a proposed figure to the NHS's representatives. 
Regardless of the amount, the monies will go to the executor of my mother in law's estate, my wife's father. 
If my wife's father wanted to give us a share of the monies, would he be liable to pay any inheritance tax or any other taxes? 
I should add that probate on my mother in law's estate was granted a year ago. 
Thank you for reading, I hope you can help. 
PD

Marcon

PlasticDragon said:

Hello there, 
Can you help? 
Four years ago, my wife brought a medical negligence claim against the NHS on behalf of her mother.
Six months after the claim was brought, her mother passed away (from the illness the NHS missed some years earlier). 
My wife continued with the claim and, after nearly four years, our representatives have taken a proposed figure to the NHS's representatives. 
Regardless of the amount, the monies will go to the executor of my mother in law's estate, my wife's father. 
If my wife's father wanted to give us a share of the monies, would he be liable to pay any inheritance tax or any other taxes? 
I should add that probate on my mother in law's estate was granted a year ago. 
Thank you for reading, I hope you can help. 
PD

 The cash won't necessarily 'go' to the executor unless he is also the sole beneficiary (or possibly the residual beneficiary, depending on the wording of the will) - otherwise he will be responsible for distributing it in accordance with the terms of the will.

It's too late for a deed of variation (that needs to be done within 2 years of a death), so if your FIL is indeed the sole beneficiary, and wishes to give you a share of the settlement, it will simply be seen as a cash gift and treated accordingly: https://www.gov.uk/inheritance-tax/gifts

Keep_pedalling

There would be no IHT any gift from your FIL regardless of where it came from. If he dies within 7 years it will still be treated as part of his estate, but that simply means the same amount of tax would be due as it would if no gifts had been made, so it is not a reason not to gift.

PlasticDragon

Thanks folks, she’s put so much work into getting this sorted and we just to to be sure it’s handled appropriately