Equity release

wiltsgrandad

One of my children is prepared to give me a large loan, (rather than me take out an equity release) to be reimbursed from the will with a mutually agreed (low) interest rate. Would the repayment of that loan reduce the inheritance tax liability? Would it be legal?

tacpot12

Yes, it would be legal and it would reduce your inheritance tax. However, you must make a legal loan agreement. Any local solicitor should be able to draw this up for you. They are not uncommon. My mother did the same for her mother. It did cause runctions in the family though, especially when my grandmother died and my mother was repaid the loan with a low level of interest - certainly less than she would have received had she left her money on depoist. My mother's siblings were not happy that their inheritence was reduced, even though they were offered the oppotunity to come in on the loan.