Gifted cash from parent over 10 years ago - still need declare?

Thrugelmir

Mickygg said:

I wouldn’t declare, I would just say it’s savings accumulated. 

Why would you lie? Instead save the hassle and produce the documentary evidence. Lying simply results anything you subsequently say being treated with suspicion. Trust is in essence broken. 

Keep_pedalling

Madeinireland101 said:

So why do you have to declare it?

 I and my wife gave our daughters some funds a couple of months ago. We sent it to their current accounts. They subsequently sent it to their savings accounts. It’s a potentially exempt transfer to them but well within inheritance limits and properly documented within letters that are stored with our wills. The intention was to help them buy houses at some point when they are ready. One of them is about to buy a house and use the money alongside their own savings. If they are asked for the source of the funds they they would say from their savings which is true. If pressed further they would of course explain that some of it is a gift but who will ask and why should it matter as it has been part of their savings for two months.

Thanks...

They would not be able to show your gift was savings if it only appeared in their savings account 2 months ago. They need to inform their solicitor that is was a gift from you, and you are going to need to provide evidence that it came from your savings, and not from dealing crack cockney or gun running.

We had to do this when my daughter bought her new house and we had made the gift 3 years previously.

davidmcn

Madeinireland101 said:

If pressed further they would of course explain that some of it is a gift but who will ask and why should it matter as it has been part of their savings for two months.

It matters (a) because solicitors (and others) need to comply with anti-money-laundering regulations, and that includes them being satisfied about the true source of funds passing through their hands - which means looking beyond which account the money briefly touched down in (they will draw a line somewhere in how far back they are going to bother looking, but it's highly likely to be a bit further back than two months), and (b) because mortgage lenders generally want borrowers' equity to have come from their own resources rather than from a third party (unless they've specifically approved the portion gifted by the other party).

None of this has anything to do with the Inheritance Tax implications of the gift.

Madeinireland101

Thanks for responses.

Well it’s gonna be pretty hard to trace back as I’ve had numerous bank accounts / shares / ISA’s  /SIPPs etc over some 40 years some/ most of which are no longer open or even indeed the organisations in some cases no longer exist. Also as it split between our daughters I’m not sure how you determine which pound went in which direction. It’s also switched between myself and my wife a number of times over the years too in order to minimise tax so that adds another level of complexity. It did sit in its last savings account for nearly a year (well some / most of it at least) so I suppose it depends how far they want to go back.

MaryNB

Madeinireland101 said:

Thanks for responses.

Well it’s gonna be pretty hard to trace back as I’ve had numerous bank accounts / shares / ISA’s  /SIPPs etc over some 40 years some/ most of which are no longer open or even indeed the organisations in some cases no longer exist. Also as it split between our daughters I’m not sure how you determine which pound went in which direction. It’s also switched between myself and my wife a number of times over the years too in order to minimise tax so that adds another level of complexity. It did sit in its last savings account for nearly a year (well some / most of it at least) so I suppose it depends how far they want to go back.

When the time comes make sure your daughter asks her solicitor up front about what info is required. Some solicitors are more thorough than others. 

From what I've read on this forum I seemed to have a pretty tough time with mine. I had a gifted deposit from each of my parents. My mother sent over payslips and a few months' worth of current account and savings account statements so my solicitor could see it was reasonable for her to have accumulated that money (the easy part...). Despite my dad having his money in a state savings account for over two years (had been there 5 years before as well but it was renewed when the first account matured) he still had to provide evidence of a lump sum payout from work when he retired 7 years beforehand. He had contact his former employer and get a letter confirming the payout. He's also a man of cash so it was much hard to show evidence of transactions.

I also provided bank statements showing all the transactions from their accounts to mine. And of course evidence of how I accumulated funds myself. A narrative explaining it all helped as well. It got through in the end but my solicitor wasn't the most helpful, she'd sit on the info we sent over for a few weeks before asking for more. 

At the end of the day the onus is entirely on your daughter to provide proof of source of the funds. If the solicitor isn't happy it can't be used as part of the deposit. If the money hasn't been in her account long she should declare it as a gift. Wouldn't be the best idea to get on the wrong side of the solicitor from the start. 

Madeinireland101

Thanks - It’s just seems like a lot of effort - however your reply did jog my memory enough to realise that most of these funds, if not all, originated from my Voluntary Redundancy payment which I received in August 2017 so hopefully I can dig up some evidence of that as it was split over three tax years. I suppose I only need to prove half the total funds and I can complete the same exercise for the other half with a different solicitor using the same evidence when my other daughter decides to go for a house. What a waste of time!

MaryNB

Madeinireland101 said:

Thanks - It’s just seems like a lot of effort - however your reply did jog my memory enough to realise that most of these funds, if not all, originated from my Voluntary Redundancy payment which I received in August 2017 so hopefully I can dig up some evidence of that as it was split over three tax years. I suppose I only need to prove half the total funds and I can complete the same exercise for the other half with a different solicitor using the same evidence when my other daughter decides to go for a house. What a waste of time!

Ask the solicitor up front. Like I said mine seemed to be particularly thorough. I didn't think it was a waste of time, just unfortunately my solicitor was a bit vague to start with so took a lot longer to sort than I would have liked. My mother and I have everything online and easy to follow, my dad is a totally different story and has an aversion to anybody checking his finances for no other reason than he thinks it's none of their business what he does with his money. 

If your funds are legit it can seem a hassle but  the regs aren't designed for people who are using legit funds. It's not a waste of time in many cases. 

There was a post on here the other day by someone who got a gifted deposit from an employer. Since most lenders don't allow that (generally only allowed from certain family members or partners) their employer transferred it to their father's account who then transferred it to them. Told the solicitor it was a gift from their father. Got caught out pretty quickly. Very small fish in terms of AML regs (well, maybe more of a case of not adhering to the lenders T&C's) but there are plenty of people who would try far more nefarious things.