Distributing Estate - no will

Superb52

Hi,
My mum died intestate earlier this year.

Although she had no will she did tell her husband her wishes & that included passing money to her children. 

My stepdad has been told he can't pass any money to us without him having to pay a huge amount of tax due to rule changes. I'm confused by this as the only tax risk I thought there would be is if he dies within 7 years but surely that relates to inheritance tax which I am certain won't be an issue. 

He is looking at passing £15k to each of us. 

I have suggested a deed of variation may solve the issue but he doesn't really understand.

Can someone explain the tax risks to my stepdad if he passes money to us without a deed of variation.

Many thanks. 

RAS

Who has told step-dad that he can't pass money to you?

Linton

The only tax issue is as you say if he is liable for inheritance tax.  Also there could be an issue if he makes a gift that impoverishes himself when claiming means tested benefits or financial support for care home costs.

pollypenny

Sadly, if she didn't make a will any savings she had go to her husband. 

comeandgo

Which country are you in?

Flugelhorn

I think husband can do Deed of Variation and pass the money to the children if he is happy to do so 

bobster2

pollypenny said:

Sadly, if she didn't make a will any savings she had go to her husband. 

Not all of it to the husband if in England & Wales and estate is worth over £270,000

The husband, wife or civil partner gets:

• up to £270,000 in assets, and half of the rest of the estate
• all of the personal possessions of the deceased

The children of the deceased are entitled to a share of the half of the estate above £270,000.

Keep_pedalling

bobster2 said:

pollypenny said:

Sadly, if she didn't make a will any savings she had go to her husband. 

Not all of it to the husband if in England & Wales and estate is worth over £270,000

The husband, wife or civil partner gets:

• up to £270,000 in assets, and half of the rest of the estate
• all of the personal possessions of the deceased

The children of the deceased are entitled to a share of the half of the estate above £270,000.

Just to add to the above joint assets such as a home held as joint tenants or joint bank or savings account don’t form part of her inheritable estate and pass automatically to the surviving spouse so are not included in the £270k .

Keep_pedalling

Who ever told your SF this is an ignorant idiot and needs to be ignored. We do not have gift taxes in the UK so anything he gives away is not taxable. If his estate is likely to be in IHT territory then he should do this via a deed of variation, otherwise a simple gift is fine.

Mojisola

Superb52 said:
My mum died intestate earlier this year.
Although she had no will she did tell her husband her wishes & that included passing money to her children.
My stepdad has been told he can't pass any money to us without him having to pay a huge amount of tax due to rule changes.

Is this an excuse he's using because he doesn't want to just say no to complying with her wishes?

Marcon

Superb52 said:

Hi,
My mum died intestate earlier this year.

Although she had no will she did tell her husband her wishes & that included passing money to her children. 

My stepdad has been told he can't pass any money to us without him having to pay a huge amount of tax due to rule changes. I'm confused by this as the only tax risk I thought there would be is if he dies within 7 years but surely that relates to inheritance tax which I am certain won't be an issue. 

He is looking at passing £15k to each of us. 

I have suggested a deed of variation may solve the issue but he doesn't really understand.

Can someone explain the tax risks to my stepdad if he passes money to us without a deed of variation.

Many thanks. 

He won't have to pay any tax. If he dies within 7 years then his estate might have to pay some tax, but not on all the money. He can gift a total of up to £3,000 a year (and if he didn't make any gifts last year, then he can use £3,000 from that year).