Does a parent's gift of cash need documenting?

waveyjane

If a parent gives cash to their child above the IHT allowance (ie £3,000 or £6,000 if carried over) but below the nil rate band (£325,000), how should they record that? Is it enough to send them a letter or something saying the money was a gift? Or do they need to do some kind of legally thing?

Mojisola

We just keep a record of the gift in our accounts to make life easier for our executors when the time comes.

Malthusian

A good practice is to print out the IHT403 form, fill it out, date it and keep it in your "death file". Then update it each year or every time you make a gift that might have to be included in the estate.
If you can fill it out then your executors will be able to fill it out when the time comes. All your executors have to do is update it as necessary.

sheramber

The parent needs to keep a record of payments made  so that the executor can refer to it if/when needed.

silvercar

Some of these posts assume that the parent is elderly.

We have made large gifts to our kids with no documentation, we are in our 50s. If the worst should happen either it will be identified in our estate or it won't. We won't be around to find out.....

DullGreyGuy

waveyjane said:

If a parent gives cash to their child above the IHT allowance (ie £3,000 or £6,000 if carried over) but below the nil rate band (£325,000), how should they record that? Is it enough to send them a letter or something saying the money was a gift? Or do they need to do some kind of legally thing?

The record is to make your executor's job easier when going through your records. If you dont care about helping making their life easier then there is no requirement for record keeping and they'll just have to try and work out what happened to the £20,000 you withdrew in 2020.

If you do then just keep a file where you add the details if/when you make a gift.

Keep_pedalling

silvercar said:

Some of these posts assume that the parent is elderly.

We have made large gifts to our kids with no documentation, we are in our 50s. If the worst should happen either it will be identified in our estate or it won't. We won't be around to find out.....

The age you die is irrelevant to keeping good records to make life easier for your executors at a difficult time. If you have made a couple of one off gifts to your children and they also happen to be your executors then it is probable not an issue, but if like us you have made gifts of varying amounts every year then they are not going to remember how much they got each year, nor will they be aware of any other gifts that may have been made.

Regardless of how long you think you will live it’s good practice to keep a simple record of your gifts (along with a list of bank accounts and investments) 

silvercar

Keep_pedalling said:

silvercar said:

Some of these posts assume that the parent is elderly.

We have made large gifts to our kids with no documentation, we are in our 50s. If the worst should happen either it will be identified in our estate or it won't. We won't be around to find out.....

The age you die is irrelevant to keeping good records to make life easier for your executors at a difficult time. If you have made a couple of one off gifts to your children and they also happen to be your executors then it is probable not an issue, but if like us you have made gifts of varying amounts every year then they are not going to remember how much they got each year, nor will they be aware of any other gifts that may have been made.

Regardless of how long you think you will live it’s good practice to keep a simple record of your gifts (along with a list of bank accounts and investments) 

The gifts over the limit are all to the kids, so it won’t be an issue. If someone goes to the effort of trawling through 6 years of bank accounts, then the only large payments they will see will be for our own holidays, large items for our home and kids’ gifts. Rewriting our wills to make the kids our executors is on our to do list.