Re gifts iht

Hi, when a married donor gifts money and Dies within seven years, not above the NRB, but above the yearly threshold of £3k,does this affect the claimable nrb ,hnrb of the remaining spouse ?
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Comments

  • It works like this.

    Mr Jones makes a gift of £103,000, 6 years later he dies leaving his remaining estate to his wife. The remainder of his estate is covered by spousal exemption so regardless of size is exempt from IHT. 

    When Mrs Jones dies her executors can transfer any of Mt Jones’ unused NRB, but because he used up £100k with the gift, the transferable NRB is reduced to £225k making a total of £550k.

    if they were home owners and she is leaving the bulk of her estate to direct descendants then her estate will also be able to claim the residential NRBs if needed.  
  • It works like this.

    Mr Jones makes a gift of £103,000, 6 years later he dies leaving his remaining estate to his wife. The remainder of his estate is covered by spousal exemption so regardless of size is exempt from IHT. 

    When Mrs Jones dies her executors can transfer any of Mt Jones’ unused NRB, but because he used up £100k with the gift, the transferable NRB is reduced to £225k making a total of £550k.

    if they were home owners and she is leaving the bulk of her estate to direct descendants then her estate will also be able to claim the residential NRBs if needed.  
    Thanks K, much appreciated.
    asking multiple questions, so I can relate them to the kids.
    I am about to make a large gift to them, £100k , split,so needed to know how it affects them after second one dies, and estate is wound up.
  • Keep_pedalling
    Keep_pedalling Posts: 16,193
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    edited 30 September 2023 at 7:38AM
    Gifts will have no negative affects on your children. The worse that can happen is that you die premature and your estate pays roughly the same amount of tax as it would have done if you had not made the gift. 

    You should consider making this a joint gift rather than just from you as that way you would both have to die within 7 years to get no benefit. 

    If you are reasonably healthy you can take out cheap term insurance that will pay out  if you die within 7 years. The amount of cover you would need would be 40% of the gift and the policy written in trust for your beneficiaries.
  • Thanks K, confused.
    I was told on my other thread, to donate gift myself, as I am the younger of the two of us, by 5 years and main earner.
    wife 81, me 76.
    too old for insurance surely, rates would be high ?
    that’s why I opened a new a/ c to be the sole donor, plus after this large one off,  other gifts as out of income, on a regular basis, Xmas, birthdays.
    me being the main earner?
    Unless gifts are out of income, any donation over £3k  in the last 7 years of the donor dying has an adverse affect on the nrb transferred to surviving spouse?
    to get full nrb transfer, one has not to have given any gift over £3k in the last 7 years?
    is that it?
    Sorry if I sound thick, conflicting advice !
  • Keep_pedalling
    Keep_pedalling Posts: 16,193
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    Thanks K, confused.
    I was told on my other thread, to donate gift myself, as I am the younger of the two of us, by 5 years and main earner.
    wife 81, me 76.

    For insurance purposes you are only 2 years apart as women have a longer life expectancy so realistically either of you could be first so I would split it unless one of you has a major health issue.

    too old for insurance surely, rates would be high ?

    Yes, that would be expensive at your age.

    that’s why I opened a new a/ c to be the sole donor, plus after this large one off,  other gifts as out of income, on a regular basis, Xmas, birthdays.
    me being the main earner?

    if you have excess income then yes make regulars gifts from that to prevent your estate getting bigger, but keep good records of both the gifts and expenditure.

    Unless gifts are out of income, any donation over £3k  in the last 7 years of the donor dying has an adverse affect on the nrb transferred to surviving spouse?

    to get full nrb transfer, one has not to have given any gift over £3k in the last 7 years?
    is that it?
    Sorry if I sound thick, conflicting advice !
    Yes, you only get the full TNRB if no non exempt gifts have been given in the previous 7 years, but that is not a reason not to make the gift as the effect is neutral rather than negative as the some amount of IHT will apply whether the gift had been made or not.
  • Cheers K.
    hope you don’t mind, but why would it be advantageous to gift a large amount from joint donor, rather than a sole donor?
    taking account of our age difference , health ,and income 
  • Keep_pedalling
    Keep_pedalling Posts: 16,193
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    Cheers K.
    hope you don’t mind, but why would it be advantageous to gift a large amount from joint donor, rather than a sole donor?
    taking account of our age difference , health ,and income 
    If you are of similar age and state of health then you spread the risk of one doing and the whole PET failing. If one of you as at much higher risk of dying first then a sole gift is probably the best option. Just based on your ages I don’t think it worth it coming just from you but if your wife has medical conditions that increase the chance of her dying then it might be better to go with the solo gift.

    Which ever way you go it is a gamble you just need to way op the odds.
  • Cheers K.
    hope you don’t mind, but why would it be advantageous to gift a large amount from joint donor, rather than a sole donor?
    taking account of our age difference , health ,and income 
    If you are of similar age and state of health then you spread the risk of one doing and the whole PET failing. If one of you as at much higher risk of dying first then a sole gift is probably the best option. Just based on your ages I don’t think it worth it coming just from you but if your wife has medical conditions that increase the chance of her dying then it might be better to go with the solo gift.

    Which ever way you go it is a gamble you just need to way op the odds.
    Thanks again K
    much appreciated.
    I see what you mean.
    wife is older, and is showing signs of early dementia.
    doesn’t mean much, I could get knocked down by a bus tomorrow!
    The worst that happens is a failed pet as you say.
    cheers.
  • Keep_pedalling
    Keep_pedalling Posts: 16,193
    First Anniversary First Post Name Dropper Photogenic
    Forumite
    Cheers K.
    hope you don’t mind, but why would it be advantageous to gift a large amount from joint donor, rather than a sole donor?
    taking account of our age difference , health ,and income 
    If you are of similar age and state of health then you spread the risk of one doing and the whole PET failing. If one of you as at much higher risk of dying first then a sole gift is probably the best option. Just based on your ages I don’t think it worth it coming just from you but if your wife has medical conditions that increase the chance of her dying then it might be better to go with the solo gift.

    Which ever way you go it is a gamble you just need to way op the odds.
    Thanks again K
    much appreciated.
    I see what you mean.
    wife is older, and is showing signs of early dementia.
    doesn’t mean much, I could get knocked down by a bus tomorrow!
    The worst that happens is a failed pet as you say.
    cheers.
    Sorry to hear that, perhaps your original plan is the way to go. Do you both have lasting powers of attorney in place? If not that should be a priority.
  • Cheers K.
    hope you don’t mind, but why would it be advantageous to gift a large amount from joint donor, rather than a sole donor?
    taking account of our age difference , health ,and income 
    If you are of similar age and state of health then you spread the risk of one doing and the whole PET failing. If one of you as at much higher risk of dying first then a sole gift is probably the best option. Just based on your ages I don’t think it worth it coming just from you but if your wife has medical conditions that increase the chance of her dying then it might be better to go with the solo gift.

    Which ever way you go it is a gamble you just need to way op the odds.
    Thanks again K
    much appreciated.
    I see what you mean.
    wife is older, and is showing signs of early dementia.
    doesn’t mean much, I could get knocked down by a bus tomorrow!
    The worst that happens is a failed pet as you say.
    cheers.
    Sorry to hear that, perhaps your original plan is the way to go. Do you both have lasting powers of attorney in place? If not that should be a priority.
    Yes, both PA, s done thanks.
    thanks for advice, very grateful.
    👍

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