PET gifting via joint account

Leave_it_to_Psmith

My wfe and I would like to make a PET gift (say £100K) to our adult son.  We are likely to exceed the IHT threshold, and are both at an age where we don't want to predict who might die sooner, so hedging our bets seems best.  We have a joint bank account and separate ISA accounts.  If we each make a transfer of £50K from our ISAs to our bank, and then one transfer of £100K to our son (keeping records of all the transfers), what would be the situation in the event of the death of one of us within seven years - would this then be treated as a 50/50 shared gift with only the deceased's part failing?
If this is too indeterminate, would it be better to make separate transfers of £50K from the bank (though it seems difficult to get the bank to identify which joint account holder instigated a particular transfer)?
Any advice or experience would be much appreciated.

Marcon

Leave_it_to_Psmith said:

My wfe and I would like to make a PET gift (say £100K) to our adult son.  We are likely to exceed the IHT threshold, and are both at an age where we don't want to predict who might die sooner, so hedging our bets seems best.  We have a joint bank account and separate ISA accounts.  If we each make a transfer of £50K from our ISAs to our bank, and then one transfer of £100K to our son (keeping records of all the transfers), what would be the situation in the event of the death of one of us within seven years - would this then be treated as a 50/50 shared gift with only the deceased's part failing?
If this is too indeterminate, would it be better to make separate transfers of £50K from the bank (though it seems difficult to get the bank to identify which joint account holder instigated a particular transfer)?
Any advice or experience would be much appreciated.

If you've got records showing each of you withdrew £50K from your own ISA, and then a further record showing the £100K being gifted to your son, then it's hard to see how HMRC could argue that this was anything other than a 50:50 gift. They might try, but that looks a pretty good 'defence'!

Keep_pedalling

Yes, this would be treated as a joint gift. Have you takin into account that you both have a residential NRB that could keep you out of IHT territory unless your joint assets exceed £1M? I am assuming you are home owners and your home is worth £350k or more here.

Leave_it_to_Psmith

Thank you both - very helpful, and much appreciated.  And K_P, yes thank you, I have taken the RNRB into account, and I'm still in the zone - but I guess it's a good problem to have...

itwasntme001

How does it work in the OPs example, say one of them dies within 7 years, does the NRB for that person gets used up for their share (50% in this case) on the death, or can the full NRB be transfered to the survivor if live for >7 years, the gifts are ET?

Keep_pedalling

itwasntme001 said:

How does it work in the OPs example, say one of them dies within 7 years, does the NRB for that person gets used up for their share (50% in this case) on the death, or can the full NRB be transfered to the survivor if live for >7 years, the gifts are ET?

Yes, is one dies within 7 years the it will reduce the TNRB to surviving spouse. If both survive 7 years both gifts become exempt and the TNRB is no longer impacted on th thirst death.

itwasntme001

Keep_pedalling said:

itwasntme001 said:

How does it work in the OPs example, say one of them dies within 7 years, does the NRB for that person gets used up for their share (50% in this case) on the death, or can the full NRB be transfered to the survivor if live for >7 years, the gifts are ET?

Yes, is one dies within 7 years the it will reduce the TNRB to surviving spouse. If both survive 7 years both gifts become exempt and the TNRB is no longer impacted on th thirst death.

Will it just reduce/use the NRB and not the RNRB?  So the RNRB is always passed to surviving spouse?  Even if a gift of a share in the family home was made by the one that dies - that gift just using the NRB if made within 7 years of death?

Keep_pedalling

Just the NRB. The RNRB will usually be passed to the spouses estate but not always.