Giving away shares

Keep_pedalling

sanfairyanne said:

Brie said:

There is also the potential issue of deprivation of assets if mom needs local authority support for her care at some point.  If she needed care and had no money but had shares she might be expected to sell them.  If she gives the shares to you and sis you both might be expected to give the shares or their value back.

We're both planning on keeping them for exactly that purpose.

Then there is no point in transferring them.

Keep_pedalling

sanfairyanne said:

p00hsticks said:

sanfairyanne said:

As far as I know money or shares can be given away, however, i understand there's a 7 year rule meaning after 7 years the 'gift' would not be considered part of an estate after death. 

There is such an Inheritance Tax rule, but for many it is of little significance, as the majority of estates - especially those of surviving spouses who are leaving their property to descendants - are not high enough for the tax to be relevant.   

I understand £350k can be passed from one partner to the other amounting to £750k which would not be taxable but they collectively have around 1.2M

If you mother is a widow and inherited everything from her husband then her estate will have a maximum IHT exemption of £1M, which would require the family home to be worth more at least £350k so both residential nil bands in full.

If her estate is in IHT territory then gifting is probably worthwhile, but if she has to sell or transfer the shares to do it then there could be an immediate substantial CGT liability for your mother. She only has a £3000 CGT exemption so any gain above that level will be taxable. 

Linton

So, depending on the details, the family could be liable for tax charges > £100k.  This, in my view is a situation that requires professional  advice rather than relying on an internet forum.

DiamondLil

In reply to the OP, last year I asked this question of Hargreaves Lansdown, and yes, one can gift stock from one HL account to another HL Fund & Share Account.

 

sanfairyanne

Linton said:

So, depending on the details, the family could be liable for tax charges > £100k.  This, in my view is a situation that requires professional  advice rather than relying on an internet forum.

Thanks Linton, I always assumed I'd have to get professional advice. I just thought I'd 'dip my toes in the water' here first.

sanfairyanne

Keep_pedalling said:

sanfairyanne said:

p00hsticks said:

sanfairyanne said:

As far as I know money or shares can be given away, however, i understand there's a 7 year rule meaning after 7 years the 'gift' would not be considered part of an estate after death. 

There is such an Inheritance Tax rule, but for many it is of little significance, as the majority of estates - especially those of surviving spouses who are leaving their property to descendants - are not high enough for the tax to be relevant.   

I understand £350k can be passed from one partner to the other amounting to £750k which would not be taxable but they collectively have around 1.2M

If you mother is a widow and inherited everything from her husband then her estate will have a maximum IHT exemption of £1M, which would require the family home to be worth more at least £350k so both residential nil bands in full.

If her estate is in IHT territory then gifting is probably worthwhile, but if she has to sell or transfer the shares to do it then there could be an immediate substantial CGT liability for your mother. She only has a £3000 CGT exemption so any gain above that level will be taxable. 

Thanks KeepPedalling, I checked recent similar sales on the street and estimate the property to be worth 375-400k. Her husband is still alive, it's just that she has a bit more stock than him. I don't understand the full exemption of £1M, am I right in saying you can only take advantage of this if the property is left to the children? I haven't seen the will but I think everything is to be split up between my sister and her children. I'm not sure if by splitting it with my sisters children we'd be exempt from the full 1M. It looks like I need to ask to see the will, then get professional advice. 

Keep_pedalling

sanfairyanne said:

Keep_pedalling said:

sanfairyanne said:

p00hsticks said:

sanfairyanne said:

As far as I know money or shares can be given away, however, i understand there's a 7 year rule meaning after 7 years the 'gift' would not be considered part of an estate after death. 

There is such an Inheritance Tax rule, but for many it is of little significance, as the majority of estates - especially those of surviving spouses who are leaving their property to descendants - are not high enough for the tax to be relevant.   

I understand £350k can be passed from one partner to the other amounting to £750k which would not be taxable but they collectively have around 1.2M

If you mother is a widow and inherited everything from her husband then her estate will have a maximum IHT exemption of £1M, which would require the family home to be worth more at least £350k so both residential nil bands in full.

If her estate is in IHT territory then gifting is probably worthwhile, but if she has to sell or transfer the shares to do it then there could be an immediate substantial CGT liability for your mother. She only has a £3000 CGT exemption so any gain above that level will be taxable. 

Thanks KeepPedalling, I checked recent similar sales on the street and estimate the property to be worth 375-400k. Her husband is still alive, it's just that she has a bit more stock than him. I don't understand the full exemption of £1M, am I right in saying you can only take advantage of this if the property is left to the children? I haven't seen the will but I think everything is to be split up between my sister and her children. I'm not sure if by splitting it with my sisters children we'd be exempt from the full 1M. It looks like I need to ask to see the will, then get professional advice. 

If you leave the bulk of your estate to children or grand children the RNRB can be claimed. If your mother gives away in excess of £325k and dies within 7 years of doing so then there is going to be IHT to pay on her death regardless of your parents net worth because she will have used up her entire NRB on the gifts. 

If she should need residential care and your father is still living in the home there is also the possibility that deliberate deprivation of assets may come in to play.

Do your parents have wills and lasting powers of attorneys in place?