Gift with reservation

How is this decided. I am doing some planning. Mum is well :) 7 years ago she  had to sell  her flat £400k which I shared, becuase she was becoming housebound due to increased infirmairty. 32 steps for an 83 year old.  During this time   I was caring for her as well as working. She gave me the proceeds so I could buy,  for us, a more suitable flat, with lift and ensuite. I also had to taken out a mortgage. Mums health has deteriorated  further since and for the last three years I have been her full time carer, giving up work and receiving AA and CA.
Questions 
1) So now it is 7 years is the money gifted no outside of IHT? 
2) Or would it be be considered a gift with reservation?  If so
3) There is an exception relating to infimaty which I think would be relevant as we had to move because mum was becoming housebound. 
4) Mums estate in any case would not exceed the IHT rate if I included transfer of dads NRB 
5) So when the time comes and I hope its not for a long while - can just a probate form be done.

Comments

  • Keep_pedalling
    Keep_pedalling Posts: 16,134
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    1. No because as you suggest it is a gift with reservation of benefit.
    2. see 1
    3. No
    4. Correct, the estate can use the transferable NRB so no IHT liability. You could also use her residential NRB.
    5. If you use the transferable NRB then yes you only need to apply for probate. Any use of the RNRB would need an IHT return.
  • INOPSU
    INOPSU Posts: 3
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    Thnaks keep_pedalling

    Out of interest why do you say No to query three about an exception due to infirmatity.  That is clearly stated under Exceptions in the legislation - Finance Act 1986, SCHEDULE 20.  Mum had to move as she could no longer gain easy access to her flat and she had restricted vision.  I am now her full time carer.  The alternative would have been to put mum in a care home.

    6

    (b)in the case of property which is an interest in land, any occupation by the donor of the whole or any part of the land shall be disregarded if—

    (i)it results from a change in circumstances of the donor since the time of the gift, being a change which was unforseen at the time and was not brought about by the donor to receive the benefit of this provision; and

    (ii)it occurs at a time when the donor has become unable to maintain himself through old age, infirmity or otherwise; and

    (iii)it represents a reasonable provision by the donee for the care and maintenance of the donor; and

    (iv)the donee is a relative of the donor or his spouse [or civil partner];

    Answer to 5 should solve everything as the estate is less than £650k.  Would I need to fill in a transfer form@, if so which? or just prove evidence of my fathers 100% transfer to mum. The thought of going throu the IHT400 form and others is enough to sink anyone

    Mum I am pleased to say is live and well

    Thnaks for you advice

  • theoretica
    theoretica Posts: 12,223
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    INOPSU said:
    Thnaks keep_pedalling

    Out of interest why do you say No to query three about an exception due to infirmatity.  That is clearly stated under Exceptions in the legislation - Finance Act 1986, SCHEDULE 20.  Mum had to move as she could no longer gain easy access to her flat and she had restricted vision.  I am now her full time carer.  The alternative would have been to put mum in a care home.

    6

    (b)in the case of property which is an interest in land, any occupation by the donor of the whole or any part of the land shall be disregarded if—

    (i)it results from a change in circumstances of the donor since the time of the gift, being a change which was unforseen at the time and was not brought about by the donor to receive the benefit of this provision; and

    (ii)it occurs at a time when the donor has become unable to maintain himself through old age, infirmity or otherwise; and

    (iii)it represents a reasonable provision by the donee for the care and maintenance of the donor; and

    (iv)the donee is a relative of the donor or his spouse [or civil partner];

    Answer to 5 should solve everything as the estate is less than £650k.  Would I need to fill in a transfer form@, if so which? or just prove evidence of my fathers 100% transfer to mum. The thought of going throu the IHT400 form and others is enough to sink anyone

    Mum I am pleased to say is live and well

    Thnaks for you advice


    I suspect you are missing the 'ands' at the end of those clauses -it looks like i needs to apply as well as ii to iv.
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
  • INOPSU
    INOPSU Posts: 3
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    Not sure I understand your response. Mum had to sell as she was effectively housebound and needed en suite. So from what I can see the gift is exempt as it meets all the criteria.
    With regards my query 5, any thoughts on which form would be required to be filled in . Probably best for me to contact IHT direct when time comes. Not yet though TG
  • theoretica
    theoretica Posts: 12,223
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    How are you interpreting 'it results from a change in circumstances of the donor since the time of the gift, being a change which was unforseen at the time'?
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
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