Balancing the lifetime gifts of a parent to their children

bobzilla

If not covered by their will, what would be the normal way to balance a set of gifts from a late parent? 

Would the process require present values to be computed by the CPI or RPI? Also, had the siblings invested their gifts in similar property, might not a Land Registry house price index give a better indication of their present values? 

Keep_pedalling

Unless all the children agree you can’t, either the terms of the will apply or intestacy rules apply, and the estate distributed accordingly.

Daniel54

The value of a gift is fixed at the point the gift is passed to the recipient

So present values are immaterial

If you feel there is an imbalance to be adjusted , then that would be a matter of agreement  between the administrator/executor  and all  the beneficiaries.

SeniorSam

Just remember that each year a person can make gifts up to certain amounts without any inheritance tax liability. Also that if the whole estate is not above the IHT limit ( often £325,000 plus residential allowance of £175,000), accounting for gifts, then the gifting details are not needed. The executor of the Will has the responsibility to deal with this.

getmore4less

Daniel54 said:

The value of a gift is fixed at the point the gift is passed to the recipient

So present values are immaterial

If you feel there is an imbalance to be adjusted , then that would be a matter of agreement  between the administrator/executor  and all  the beneficiaries.

Any adjustment does not need the involvement of the administrator, unless the IHT situation changes unlikely with siblings. 

bobzilla

Many thanks for all your responses. I was prompted to ask the question by the case of an acquaintance who left their children (both equal inheritors, executors & administrators) to balance the lifetime gifts with a transfer from their inheritance. 

My own concern is to treat my adult children equally, keep my gifts to them in balance and prevent disputes by adjusting my gifts for inflation where necessary.  Would it then be sound practice to estimate the present values of gifts that were made years before?

Also, btw, I wonder if another part of the forum might be better for this supplementary question?

bobster2

You mean the gifts have been gidt

bobzilla said:

Many thanks for all your responses. I was prompted to ask the question by an acquaintance who left their children (both equal inheritors, executors & administrators) to balance the lifetime gifts with a transfer from their inheritance. 

My own concern is to treat my adult children equally, keep my gifts to them in balance and prevent disputes by adjusting my gifts for inflation where necessary.  Would it then be sound practice to estimate the present values of gifts that were made years before?

Also, btw, I wonder if another part of the forum might be better for this supplementary question?

When you say you had an acquaintance who did this - do you mean they found a way to do it in a legally enforceable manner? Or simply asked their beneficiaries to voluntarily agree to try to do something like this using a deed of variation?

It's hard enough to think of a way of enforcing any sort of "balancing" at all - let alone taking into account inflation. CPI? RPI? And where? What if a beneficiary lives overseas?

I suppose it could be done using a discretionary trust - where the trustees are asked to take into account earlier gifts when making decisions. But by definition the trustees must have discretion.

Keep_pedalling

We keep it simple, and more or less give the same amount to each off our children. They both get gifted the same amount each year, but on to of this we do make additional gift in case of need. For instance We paid our daughters student lone off, but our son did not have one as he went to uni 3 years earlier and lived at home. 

By the time we are both dead there may be a few thousand difference in our giving over the years but there will be no levelling up.

bobzilla

Thanks bobster2 for alerting me to further complications and Keep_pedalling for the practical tip.
As I understand it, the gifts of my acquaintance were way out of balance. They did simply suggest a "balancing transfer" and asked their beneficiaries (both UK residents) to voluntarily arrange it. It wasn't legally enforceable but eventually one of the beneficiaries made a deed of variation based on the face values of the gifts with no allowance for inflation.
That is what got me thinking about balancing my own gifts while I'm still around to keep everything fair. 

getmore4less

Whatever you try to come up with will have a chance of breaking down.

You are effectively trying to change the distributable value of the estate with current value.

Take the house example.

If you help one siblings(A) with a house deposit for say 20% and the other(B) does not need it.

20years on the 20% of the property is worth £200k.

your estate has been eaten by care fees.

Does A owe B £100k?

If after 10years you have B something would you do a ballance then?

What if you gave B something to help them move to a high earning career earning £100's k more than A should B share their fortunes.

bobzilla

With all due thanks to those who contributed I have now found a book that covers this question in more detail: ‘Beyond the Grave’, especially Chapter 5, it's on Amazon UK ‘Look Inside’. 

The book is by Jeffrey L Condon, an American lawyer and his advice for parents concerned about gifts to their children is to keep them in balance at all times. If not able to do that they should estimate the effects of inflation and appreciation on the values of their gifts and adjust their wills accordingly. 

This confirms my feeling that present values are not immaterial [sorry Daniel54]. I also feel that a wish like this should be applied whether or not written in the will: a deed of variation could be used to make a transfer if it wasn't. Presumably the index used to work out the effects of inflation and appreciation would have to be negotiated within the family.