Best way to cut inheritance tax without gifting?

nick74

Of course there is a way around this, but I can't see it being palatable to any of the parties concerned, to put it mildly. (This was once suggested on a tax planning course I attended!) Now that same-sex marriages are allowed, the OP's partner needs to marry the OP's mother...When the mother dies her 'wife' inherits everything tax-free. She is then free to marry OP and gift everything to him, tax free....

Keep_pedalling

nick74 said:

Of course there is a way around this, but I can't see it being palatable to any of the parties concerned, to put it mildly. (This was once suggested on a tax planning course I attended!) Now that same-sex marriages are allowed, the OP's partner needs to marry the OP's mother...When the mother dies her 'wife' inherits everything tax-free. She is then free to marry OP and gift everything to him, tax free....

Or do a runner with the money

nick74

Keep_pedalling said:

nick74 said:

Of course there is a way around this, but I can't see it being palatable to any of the parties concerned, to put it mildly. (This was once suggested on a tax planning course I attended!) Now that same-sex marriages are allowed, the OP's partner needs to marry the OP's mother...When the mother dies her 'wife' inherits everything tax-free. She is then free to marry OP and gift everything to him, tax free....

Or do a runner with the money

Yes, that is one of the risks!

Sea_Shell

Could Mum's reluctance to gift be because she doesn't approve of the OPs choice of partner or that they aren't married and "settled down"?

tommydog40

elouise01582 said:

Have you considered a Whole of Life policy placed in trust?

I suppose a whole of life policy placed into trust would only have to be large enough to offset any likely inheritance tax bill.  But would the premiums not be exorbitant for a 75 year old?

elouise01582

You would need to obtain some quotes to find out.

Jeremy535897

elouise01582 said:

You would need to obtain some quotes to find out.

I don't think a child has an insurable interest in a parent's life under English law. Mother would have to take out the policy herself and then assign the benefit (and the obligation to pay premia) to OP as soon as possible.

tommydog40

Jeremy535897 said:

I don't think a child has an insurable interest in a parent's life under English law. Mother would have to take out the policy herself and then assign the benefit (and the obligation to pay premia) to OP as soon as possible.

 As long as I give her the money to pay the premiums, I don't think she would have a problem with that.  But at the age of 75, don't you think the premiums would be prohibitive if I wanted enough money to offset any inheritance tax on her death?  It's statistically unlikely that she will live for another 10 years and on that basis, the insurance company have to safeguard against making a loss.  But maybe this is the best idea mooted so far.

theoretica

tommydog40 said:

Jeremy535897 said:

I don't think a child has an insurable interest in a parent's life under English law. Mother would have to take out the policy herself and then assign the benefit (and the obligation to pay premia) to OP as soon as possible.

 As long as I give her the money to pay the premiums, I don't think she would have a problem with that.  But at the age of 75, don't you think the premiums would be prohibitive if I wanted enough money to offset any inheritance tax on her death?  It's statistically unlikely that she will live for another 10 years and on that basis, the insurance company have to safeguard against making a loss.  But maybe this is the best idea mooted so far.

Actually, the statistics I can find are that a 75 year old woman in England will live another 13.2 years (https://digital.nhs.uk/data-and-information/publications/statistical/nhs-outcomes-framework/august-2020).  You can't just use the average life expectancy as that average includes all the deaths under the age 75 which are not relevant. 

But if you give her the money to pay the premiums it won't work - because it won't reduce the amount that is in her estate and subject to inheritance tax - it will just be you putting your money into a saving scheme and that is money that would never have been subject to inheritance tax.

elouise01582

Thanks - I try.