Help for beneficiaries to pay IHT

badmemory

Do you both have powers of attorney?

Keep_pedalling

Boleyn19 said:

Keep_pedalling said:

LHW99 said:

You could perhaps gift a share of the rental property to your sons now (not cost free, or free of implications for them possibly). If you survive 7 years, it would drop out of the calculations.

Not a good idea. That would leave Boleyn19 and her husband with an immediate CGT liability and if they still continue to receive all the rent the gift would be seen as one with reservation of benefit so would not fall out of their estate after 7 years. It would also add a further potential CGT liability down the line for their sons when the rental property was eventually sold. 

Thank you. I did not know any of that.
However the rental property could  be sold for care home fees. Also, as it stands now, my husband’s half of the property is left to his son from his first marriage.

That could lead to both IHT and CGT complications. You husband should probably look making a new will including an immediate post death interest trust rather than leave part of his estate to his children.

In the example of the rental property for instance if his share is left to his son but giving you a life interest in that share, you, as the beneficial owner, would continue to receive the rental income, spousal exemption would apply avoiding IHT on the first death. While the trust exists it is the legal owner of his share of the property so if he does already own an home, it avoids his son losing his first time buyer status and having to pay the additional 5% second home SDLT. Even if that is not the case it will avoid a CGT liability for his son when the property is sold.

I think it would be worth both of you sitting down with a STRO qualified solicitor to review you wills.

squirrelpie

Keep_pedalling said:

I think it would be worth both of you sitting down with a STRO qualified solicitor to review you wills.

Pardon my ignorance but what is a "STRO qualified solicitor". Google didn't help me

jdl920p

The government consultation on IHT changes for pensions proposes that the tax liability for pensions is paid directly by the scheme provider, so that part of the IHT bill should not be a problem from a liquidity point of view

Sarahspangles

squirrelpie said:

Keep_pedalling said:

I think it would be worth both of you sitting down with a STRO qualified solicitor to review you wills.

Pardon my ignorance but what is a "STRO qualified solicitor". Google didn't help me

I think it’s STEP (R being next to E, and P to O on the keyboard)

Keep_pedalling

Sorry, that should of cause of been STEP, I typed it in a hurry before going out.

Boleyn19

badmemory said:

Do you both have powers of attorney?

Yes we do.

Boleyn19

jdl920p said:

The government consultation on IHT changes for pensions proposes that the tax liability for pensions is paid directly by the scheme provider, so that part of the IHT bill should not be a problem from a liquidity point of view

I heard that yesterday so that part would be ok. I know there are other vehicles which can be paid direct to HMRC eg Premium Bonds. I think we’ll be looking at this.

Boleyn19

Keep_pedalling said:

Boleyn19 said:

Keep_pedalling said:

LHW99 said:

You could perhaps gift a share of the rental property to your sons now (not cost free, or free of implications for them possibly). If you survive 7 years, it would drop out of the calculations.

Not a good idea. That would leave Boleyn19 and her husband with an immediate CGT liability and if they still continue to receive all the rent the gift would be seen as one with reservation of benefit so would not fall out of their estate after 7 years. It would also add a further potential CGT liability down the line for their sons when the rental property was eventually sold. 

Thank you. I did not know any of that.
However the rental property could  be sold for care home fees. Also, as it stands now, my husband’s half of the property is left to his son from his first marriage.

That could lead to both IHT and CGT complications. You husband should probably look making a new will including an immediate post death interest trust rather than leave part of his estate to his children.

In the example of the rental property for instance if his share is left to his son but giving you a life interest in that share, you, as the beneficial owner, would continue to receive the rental income, spousal exemption would apply avoiding IHT on the first death. While the trust exists it is the legal owner of his share of the property so if he does already own an home, it avoids his son losing his first time buyer status and having to pay the additional 5% second home SDLT. Even if that is not the case it will avoid a CGT liability for his son when the property is sold.

I think it would be worth both of you sitting down with a STRO qualified solicitor to review you wills.

Ver interesting. We are updating our wills and I’ll copy your post to discuss with my husband and a solicitor.

Marcon

Boleyn19 said:

jdl920p said:

The government consultation on IHT changes for pensions proposes that the tax liability for pensions is paid directly by the scheme provider, so that part of the IHT bill should not be a problem from a liquidity point of view

I heard that yesterday so that part would be ok. I know there are other vehicles which can be paid direct to HMRC eg Premium Bonds. I think we’ll be looking at this.

A proposal is just that. You can't take it as fact until the legislation is in place.