Making use of ISA allowances for UNMARRIED Couples

Sg28

ColdIron said:

Yes and also only if your estate was over the £325,000 threshold

As a general rule you can gift whoever you like as much as you like with no immediate liability

325k plus the property nil rate band of £175k or (half?) The value of the house whichever is lower.

xylophone

property nil rate band of £175k 

https://www.skerritts.co.uk/all-you-need-to-know-about-the-residence-nil-rate-band/

The RNRB is only available where the main residence passes to direct descendants; essentially, children (including adopted, foster or stepchildren) and grandchildren.

Keep_pedalling

If either of you has a net worth exceeding £325k you really should consider your marital status. Married couples or civil partners can use spousal exemption to prevent a IHT liability on the first death, for other couples it could be financially challenging. Married couples and civil partners can also gift each other as much as they like without worrying about any IHT implication if they die within 7 years.

Qyburn

badmemory said:

If it is in a joint account it is owned 50/50 anyway.  But please make sure wills & POAs are in place to protect each others interests.

Is it 50/50 rather than joint? Most sources say that on death of one of the account holders, the survivor(s) own and control the account. Just as in life each account holder has full control, not just control of "their share".

xylophone

Is it 50/50 rather than joint? Most sources say that on death of one of the account holders, the survivor(s) own and control the account. Just as in life each account holder has full control, not just control of "their share".

Generally speaking the joint account would indeed fall under the control and ownership of the survivor and I would think that for the most part, this is understood by the account holders and  is what they require - for example, married persons often have a joint account from which all household DDs are paid and it would be desirable for this to continue.

However, in terms of eg IHT liability, while normally the funds in the account would be regarded as half owned by the deceased, there are exceptions and the legal position is far from clear cut.

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm15042

Where an account is held by parent and offspring and the parent dies, family problems can occur.

I recall a case from years ago which ended up in family turmoil.

A certain lady had entered into a second marriage  as a widow very comfortably provided for by her late spouse / father of her two daughters -  she then relatively late in life had a son by the second marriage.  

She  and the second spouse  made  wills  which  would eventually have the effect of leaving  their home (son co-occupier but not owner) to the son.

Her will left substantial cash legacies to her daughters.    In time, she was again widowed.

Some time prior to her death, she and the son visited her bank and set up a joint account - the rules relating to survivorship were clearly explained to her and she was completely compos mentis.

She moved the much of the cash into the joint account which the son was at liberty to use (as of course was she).

When she died, virtually all the cash was held jointly and the account fell under the ownership and control of the son.

Long drawn out legal wrangles followed the "reading of the will"...... as far as I recollect, the son eventually agreed to make gifts to his half sisters' children from the cash ....

Albermarle

xylophone said:

Is it 50/50 rather than joint? Most sources say that on death of one of the account holders, the survivor(s) own and control the account. Just as in life each account holder has full control, not just control of "their share".

Generally speaking the joint account would indeed fall under the control and ownership of the survivor and I would think that for the most part, this is understood by the account holders and  is what they require - for example, married persons often have a joint account from which all household DDs are paid and it would be desirable for this to continue.

However, in terms of eg IHT liability, while normally the funds in the account would be regarded as half owned by the deceased, there are exceptions and the legal position is far from clear cut.

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm15042

Where an account is held by parent and offspring and the parent dies, family problems can occur.

I recall a case from years ago which ended up in family turmoil.

A certain lady had entered into a second marriage  as a widow very comfortably provided for by her late spouse / father of her two daughters -  she then relatively late in life had a son by the second marriage.  

She  and the second spouse  made  wills  which  would eventually have the effect of leaving  their home (son co-occupier but not owner) to the son.

Her will left substantial cash legacies to her daughters.    In time, she was again widowed.

Some time prior to her death, she and the son visited her bank and set up a joint account - the rules relating to survivorship were clearly explained to her and she was completely compos mentis.

She moved the much of the cash into the joint account which the son was at liberty to use (as of course was she).

When she died, virtually all the cash was held jointly and the account fell under the ownership and control of the son.

Long drawn out legal wrangles followed the "reading of the will"...... as far as I recollect, the son eventually agreed to make gifts to his half sisters' children from the cash ....

Maybe the moral of this story, is that joint accounts are OK for paying household bills, but not for keeping the bulk of your money in!

Qyburn

xylophone said:

However, in terms of eg IHT liability, while normally the funds in the account would be regarded as half owned by the deceased, there are exceptions and the legal position is far from clear cut.

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm15042

That looks an absolute bag of worms, assessing the shares based on how much each account holder paid into the joint account.

How would they even determine that, do they look at each deposit and trace that back to the original source (which could be via several preceding accounts)? And to assess the share of the balance, shouldn't they also look at withdrawals? If I paid in 50%, but withdrew 90% it would be illogical to credit me with 50% of the remaining balance.

More practically I recall after my mother passed, Lloyds converted the joint account into solely my father's name as a purely administrative task. Some paperwork was required, but the account was never frozen and it certainly didn't wait for probate.

xylophone

More practically I recall after my mother passed, Lloyds converted the joint account into solely my father's name as a purely administrative task. Some paperwork was required, but the account was never frozen and it certainly didn't wait for probate.

This is normally the case and indeed was the case in the dispute I referenced above.

Malthusian

Qyburn said:

That looks an absolute bag of worms, assessing the shares based on how much each account holder paid into the joint account.

How would they even determine that, do they look at each deposit and trace that back to the original source (which could be via several preceding accounts)? And to assess the share of the balance, shouldn't they also look at withdrawals? If I paid in 50%, but withdrew 90% it would be illogical to credit me with 50% of the remaining balance.

"When calculating this proportion you should assume that any money withdrawn by each person should be set as far as possible against their own contributions, despite, the rule in Clayton’s Case [1816] 1 Mer 572" - HMRC, same link

But it is rarely an issue in practice because:

"You [the tax collector] should also avoid enquiries on this subject unless the amount of tax at stake is substantial."

In many cases it will be moot due to the spousal exemption.