Cash gifts from probate sale?

powerful_Rogue

I've done a bit of searching on this and seems the 7 years rule applies, but thought I would double check.

My aunt passed away and my mother is her next of kin. Probate has just been granted and my aunts house has just gone on the market for £400,000.

Once all the debts are cleared, this should leave around £300,000.

My parents would like to gift their 3 children some money from the sale of the house. Looking online it seems anything over £3000, should my parents pass away within the next 7 years, a proportion of IHT will need to be paid via the sliding scale.

Guessing that is the only feasible way of gifting from a probate sale?

Brie

Isn't there something about changing the will after the fact by the beneficiaries so the money goes directly from the estate to the children rather than via the parents?

If not IHT will only kick in if, for instance, dad dies and his total assets (barring what goes directly to mom) exceed the IHT limit.  

powerful_Rogue

Brie said:

Isn't there something about changing the will after the fact by the beneficiaries so the money goes directly from the estate to the children rather than via the parents?

If not IHT will only kick in if, for instance, dad dies and his total assets (barring what goes directly to mom) exceed the IHT limit.  

There was no will sadly. Mum has inheritied my aunts estate as the next of kin.

polar_pig

They might be able to do a Deed of Variation to modify your aunt's will (with the consent of all beneficiaries) to directly benefit the 3 children. If possible, this would mean the 7 year gift rules don't apply to any benefit they receive from the modified will. Check the conditions:

https://www.gov.uk/alter-a-will-after-a-death

 and here:

https://assets.publishing.service.gov.uk/media/5a7df4d040f0b6230268838d/IOV2.pdf

Note that even when there is no will, you can still modify the intestate rules if all the conditions are met.

p00hsticks

I'm not an expert, but my understanding is that if it's within (I think) two years of the death, your mother can get a legal Deed of Variation to give up some of her inheritance in favour of other beneficiaries, and this has the effect of the inheritance passing directly to them rather than through your mother, so avoiding the 7 year gifting rule. 
I suspect this is what Brie is thinking of. 

As far as I'm aware, a DoV can be used both to effectively change the bequests made in a will or via intestacy, and needs to be signed by all those who are adversely affected by the proposed change (in this case ,your mother).   

Keep_pedalling

A deed of variation would avoid the gifted sum ever being part of your mother’s estate. This is only really important if the inheritance pushes your parents into IHT territory which would be in excess of £1M for a married couple owning a house worth at least £350k.

The sliding scale you mentioned applies only after you have given in excess of your nil rate band (£325k) 

powerful_Rogue

Thank you all so much for your help, that seems to be what i'm looking for!

Shall have a good read into this.

SevenOfNine

We inherited by default (no will), did a DoV. Chose to use a solicitor to ensure it was watertight, in the grand scheme of things the cost was a drop in the ocean. 

powerful_Rogue

SevenOfNine said:

We inherited by default (no will), did a DoV. Chose to use a solicitor to ensure it was watertight, in the grand scheme of things the cost was a drop in the ocean. 

Thank you. That was going to be my next question! I've seen DIY lits online from £20-£50. Wondered if they were worth it, or just going to a solicitor .

tetrarch

According the this you can do it yourself

https://www.accountingweb.co.uk/any-answers/can-i-draw-up-a-simple-deed-of-variation-myself

Regards

Tet

SevenOfNine

powerful_Rogue said:

SevenOfNine said:

We inherited by default (no will), did a DoV. Chose to use a solicitor to ensure it was watertight, in the grand scheme of things the cost was a drop in the ocean. 

Thank you. That was going to be my next question! I've seen DIY lits online from £20-£50. Wondered if they were worth it, or just going to a solicitor .

Others have done DiY, advice for that on the government website https://www.gov.uk/alter-a-will-after-a-death