'Elephant in the room' question re IHT !

NannaH

My DH has a few very nice watches, destined for the Grandkids,  he’s owned them for over 10 years,  an executor wouldn’t know which, if any, were valuable,  as they aren’t well known makes like Rolex or Patek Phillipe.
  He even has a couple of very good fakes, bought in China years ago,  to the casual observer they are all just ‘watches’ , I would be the only one who knows which is the one worth getting on for £10k and I certainly won’t be putting it on the probate form, it will go straight to our Grandson. 

Whilst the super rich avail themselves of all manner of ways to avoid tax, I won’t be giving it a second thought. 

loiner

Some interesting points - thanks everyone.

Just for clarification, I'm not intending to 'hide' any money or anything, I just wanted to know how it works.

A scenario I thought of is my 95 year old father is in a wheelchair and relies on my brother for transport (I live in a different part of the country). My brother had to retire due to ill health and has a relatively small car that is difficult for our father to get in and out of. It would seem reasonable to me for our father to give my brother say £10-15K to upgrade the car, with my father benifitting from that upgrade. However, that sum is outside the annual gift allowance so causes complications. How would we get round that? It would be pointless for our father to purchase the newer car himself.

castle96

Why? Purchase in Dads name and insure son also

silvercar

castle96 said:

Why? Purchase in Dads name and insure son also

As a car is a depreciating asset, in theory that would work, as the value to the estate eventually would be lower than purchase price. However, trying to insure a 95 year old owning a car may be difficult.

Keep_pedalling

loiner said:

Some interesting points - thanks everyone.

Just for clarification, I'm not intending to 'hide' any money or anything, I just wanted to know how it works.

A scenario I thought of is my 95 year old father is in a wheelchair and relies on my brother for transport (I live in a different part of the country). My brother had to retire due to ill health and has a relatively small car that is difficult for our father to get in and out of. It would seem reasonable to me for our father to give my brother say £10-15K to upgrade the car, with my father benifitting from that upgrade. However, that sum is outside the annual gift allowance so causes complications. How would we get round that? It would be pointless for our father to purchase the newer car himself.

If your father buts the car then others have said it is a depreciating asset so will reduce his estate as it ages. Your brother can be the registered keeper.

Anyway gifting over your annual exemptions (it is not an allowance) does not cause any significant complications to anyone’s estate other than keeping a record for your executors.

loiner

silvercar said:

castle96 said:

Why? Purchase in Dads name and insure son also

As a car is a depreciating asset, in theory that would work, as the value to the estate eventually would be lower than purchase price. However, trying to insure a 95 year old owning a car may be difficult.

Too true !!

Mojisola

silvercar said:

castle96 said:

Why? Purchase in Dads name and insure son also

As a car is a depreciating asset, in theory that would work, as the value to the estate eventually would be lower than purchase price. However, trying to insure a 95 year old owning a car may be difficult.

When my Dad had to stop driving, he still wanted his car owned, taxed and insured in his name.

His insurance company were quite happy with that - the policy specified that he was not covered as a driver but gave cover for any driver over 50 (which kept the cost down and covered all of us and, in an emergency, a neighbour driving it).

uknick

silvercar said:

uknick said:

silvercar said:

uknick said:

castle96 said:

I wonder re this as well. The temptation to 'save' tax must be overwhelming (though a risk {plus a fine?})

If they could prove the executor knew about the gifts, I think it would become tax evasion which can result in a custodial sentence.  But, to get a sentence you would have to be really, really stupid and not cooperate with HMRC.

and if the executor is a solicitor?

Not sure what your point is?  Do you think solicitors are immune from prosecution?

I was thinking that some people only go to a solicitor when they have reason to. So in their whole lifetime they may only have used a conveyancing solicitor when they have bought or sold a home and a solicitor specialising in probate and wills when they wanted to write a will. As such the solicitor will only know as much as the deceased has told them. They may be unaware of all the savings accounts/ works of art/ classic cars/ wine/ property etc.

It may even be that the deceased deliberately chooses a solicitor that they have had no previous contact with, to leave their offspring to decide what should be declared.

No offence by the solicitor if they are in the dark about any gifts.  I suppose they might have to show due diligence in that they made an effort to look into gifts, but if the client tells them there were none what can they do. 

Keep_pedalling

uknick said:

silvercar said:

uknick said:

silvercar said:

uknick said:

castle96 said:

I wonder re this as well. The temptation to 'save' tax must be overwhelming (though a risk {plus a fine?})

If they could prove the executor knew about the gifts, I think it would become tax evasion which can result in a custodial sentence.  But, to get a sentence you would have to be really, really stupid and not cooperate with HMRC.

and if the executor is a solicitor?

Not sure what your point is?  Do you think solicitors are immune from prosecution?

I was thinking that some people only go to a solicitor when they have reason to. So in their whole lifetime they may only have used a conveyancing solicitor when they have bought or sold a home and a solicitor specialising in probate and wills when they wanted to write a will. As such the solicitor will only know as much as the deceased has told them. They may be unaware of all the savings accounts/ works of art/ classic cars/ wine/ property etc.

It may even be that the deceased deliberately chooses a solicitor that they have had no previous contact with, to leave their offspring to decide what should be declared.

No offence by the solicitor if they are in the dark about any gifts.  I suppose they might have to show due diligence in that they made an effort to look into gifts, but if the client tells them there were none what can they do. 

A solicitor is not simply going to take the clients word on something that could land them with financial penalties.

uknick

Keep_pedalling said:

uknick said:

silvercar said:

uknick said:

silvercar said:

uknick said:

castle96 said:

I wonder re this as well. The temptation to 'save' tax must be overwhelming (though a risk {plus a fine?})

If they could prove the executor knew about the gifts, I think it would become tax evasion which can result in a custodial sentence.  But, to get a sentence you would have to be really, really stupid and not cooperate with HMRC.

and if the executor is a solicitor?

Not sure what your point is?  Do you think solicitors are immune from prosecution?

I was thinking that some people only go to a solicitor when they have reason to. So in their whole lifetime they may only have used a conveyancing solicitor when they have bought or sold a home and a solicitor specialising in probate and wills when they wanted to write a will. As such the solicitor will only know as much as the deceased has told them. They may be unaware of all the savings accounts/ works of art/ classic cars/ wine/ property etc.

It may even be that the deceased deliberately chooses a solicitor that they have had no previous contact with, to leave their offspring to decide what should be declared.

No offence by the solicitor if they are in the dark about any gifts.  I suppose they might have to show due diligence in that they made an effort to look into gifts, but if the client tells them there were none what can they do. 

A solicitor is not simply going to take the clients word on something that could land them with financial penalties.

Agreed, which is why the client will need to sign the solicitor's terms of business which will include some form of clause indemnifying the solicitor in case the client has been economic with the truth.  Hence my comment about due diligence from the solicitor.