Inheritance and gifting money

andykirwin

Hi Money Savers,

I'm looking to understand the limits or taxation involved with both gifting money and receiving money as a gift which originated from inheritance. 

For example; if my Dad received an inheritance and wants to gift part of it to me or my brother's... How much can he gift, is there a limit? Does he have to pay any tax on money gifted? Would my brothers and I have to pay any tax on money received?

Thanks in advance!!

Caz3121

no taxes but the considerations would be (these may or may not be relevant)
Inheritance tax...the gifts would still be considered as part of your fathers estate for the next 7 years
deprivation of capital if needing means tested benefits or care

Keep_pedalling

The UK does not have a gift tax so he can give as much away as he wishes, but deprivation of assets could be an issue if he ever needs residential care. 

Another consideration if he already has substantial assets and the inheritance would eventually lead to a significant IHT liability if he died within 7 years of the gift, he could instead complete a deed of variation which effectively alters the will to pass his inheritance to his children. If he does this with 2 years of the death of the person he inherited from, for IHT purposes, it will be treated as though it never entered his estate.

Langtang

Keep_pedalling said:

The UK does not have a gift tax so he can give as much away as he wishes, but deprivation of assets could be an issue if he ever needs residential care. 

Another consideration if he already has substantial assets and the inheritance would eventually lead to a significant IHT liability if he died within 7 years of the gift, he could instead complete a deed of variation which effectively alters the will to pass his inheritance to his children. If he does this with 2 years of the death of the person he inherited from, for IHT purposes, it will be treated as though it never entered his estate.

 This is what we are in the process of doing just now. Aunt died, no will. Estate left to FIL. FIL died 3 weeks later - IHT bill. DoV to my wife for entire Aunt's estate. We'll see how it goes. Thanks to  @getmore4less

Marcon

Langtang said:

Keep_pedalling said:

The UK does not have a gift tax so he can give as much away as he wishes, but deprivation of assets could be an issue if he ever needs residential care. 

Another consideration if he already has substantial assets and the inheritance would eventually lead to a significant IHT liability if he died within 7 years of the gift, he could instead complete a deed of variation which effectively alters the will to pass his inheritance to his children. If he does this with 2 years of the death of the person he inherited from, for IHT purposes, it will be treated as though it never entered his estate.

 This is what we are in the process of doing just now. Aunt died, no will. Estate left to FIL. FIL died 3 weeks later - IHT bill. DoV to my wife for entire Aunt's estate. We'll see how it goes. Thanks to  @getmore4less

Only the beneficiary who is giving up part (or all) of their inheritance can make a DoV. If your FIL has died, how can he make one - or did he make one before he died?

Langtang

Marcon said:

Langtang said:

Keep_pedalling said:

The UK does not have a gift tax so he can give as much away as he wishes, but deprivation of assets could be an issue if he ever needs residential care. 

Another consideration if he already has substantial assets and the inheritance would eventually lead to a significant IHT liability if he died within 7 years of the gift, he could instead complete a deed of variation which effectively alters the will to pass his inheritance to his children. If he does this with 2 years of the death of the person he inherited from, for IHT purposes, it will be treated as though it never entered his estate.

 This is what we are in the process of doing just now. Aunt died, no will. Estate left to FIL. FIL died 3 weeks later - IHT bill. DoV to my wife for entire Aunt's estate. We'll see how it goes. Thanks to  @getmore4less

Only the beneficiary who is giving up part (or all) of their inheritance can make a DoV. If your FIL has died, how can he make one - or did he make one before he died?

My wife is sole beneficiary to both estates, Aunts via FIL. I believe we have up to 2 years to divert Aunts estate to my wife, via a DoV from her estate.

getmore4less

Marcon said:

Langtang said:

Keep_pedalling said:

The UK does not have a gift tax so he can give as much away as he wishes, but deprivation of assets could be an issue if he ever needs residential care. 

Another consideration if he already has substantial assets and the inheritance would eventually lead to a significant IHT liability if he died within 7 years of the gift, he could instead complete a deed of variation which effectively alters the will to pass his inheritance to his children. If he does this with 2 years of the death of the person he inherited from, for IHT purposes, it will be treated as though it never entered his estate.

 This is what we are in the process of doing just now. Aunt died, no will. Estate left to FIL. FIL died 3 weeks later - IHT bill. DoV to my wife for entire Aunt's estate. We'll see how it goes. Thanks to  @getmore4less

Only the beneficiary who is giving up part (or all) of their inheritance can make a DoV. If your FIL has died, how can he make one - or did he make one before he died?

Administrator can DOV anything the deceased inherited within the 2 years limit.