Gift from elderly parent(s) and potential impact

Cobbler_tone

My elderly mum/dad are about to gift me £20,000.
I am one of three siblings who will ultimately inherit their estate when the sad but inevitable happens. I have no idea how much this will be, without factoring in potential future care needs. Maybe £500k including their property (as a figure) but never something I have considered in my own plans.

Is there anything I/they should record and they could well be giving the three of us £20,000 each. I'd imagine they'd want the three of us treated equally.    

DE_612183

Inheritance Tax would need to be considered - the gifts would still form part of the estate if they die before 7 years has elapsed.

p00hsticks

They just need to document who is giving what to whom (probably better if each parent gives £10k unless one has much more limited life expectancy) somewhere where whoever is the executor to their wills can find it easily

Cobbler_tone

p00hsticks said:

They just need to document who is giving what to whom (probably better if each parent gives £10k unless one has much more limited life expectancy) somewhere where whoever is the executor to their wills can find it easily

I'm assuming they can gift me £3,000 each within the allowance and then need to stay with me for the next 7 years.

[Deleted User]

Cobbler_tone said:

p00hsticks said:

They just need to document who is giving what to whom (probably better if each parent gives £10k unless one has much more limited life expectancy) somewhere where whoever is the executor to their wills can find it easily

I'm assuming they can gift me £3,000 each within the allowance and then need to stay with me for the next 7 years.

If they haven’t used their allowance for the previous year that can now be utilised. 

However, as with all these cases, one should consider first  whether the estate will ever be liable for inheritance tax. On those figures that is unlikely. 

Document the gifts but, as things stand, they can give away whatever they like! There are no tax implications for the recipients or the estate. 

Cobbler_tone

[Deleted User] said:

Cobbler_tone said:

p00hsticks said:

They just need to document who is giving what to whom (probably better if each parent gives £10k unless one has much more limited life expectancy) somewhere where whoever is the executor to their wills can find it easily

I'm assuming they can gift me £3,000 each within the allowance and then need to stay with me for the next 7 years.

However, as with all these cases, one should consider first  whether the estate will ever be liable for inheritance tax. On those figures that is unlikely. 

I did think that anything they leave will most likely fall below the threshold by the time I have sadly lost both....assuming I get there, although I clearly come from good genes!

p00hsticks

Cobbler_tone said:

p00hsticks said:

They just need to document who is giving what to whom (probably better if each parent gives £10k unless one has much more limited life expectancy) somewhere where whoever is the executor to their wills can find it easily

I'm assuming they can gift me £3,000 each within the allowance and then need to stay with me for the next 7 years.

If they're just gifting you, and only you £3k, then there is no need for them to stay with you for 7 years.
If they are gifting more than that annually and their estate is potentially liable for IHT then there are consequences if they don't survive for 7 years. 

Whichever it is, I still strongly recommend documenting all such gifts somewhere where their executors can find it.

I speak from personal experience as it is a right pain first obtaining and then ploughing through seven years of bank statements from multiple banks to try and work out what gifts (if any) were made. 

Keep_pedalling

£3000 is not a limit it is an exemption, If they have not used their exemptions from last year they can gift you £6000 each and that will fall out of their estates as soon as the gifts are made. Anything over that will be a potentially exempt transfer (PET) which will fall out of their estates after 7 years. Any non exempt gifts should be recorded and kept where their executors can easily find them, to make their life easier.

Even though it seems your parents net worth is well below IHT territory and well below the level a IHT return would be needed their gifts should still be recorded.

Even if your parents were worth in excess of £1M any IHT due would come out of their residual estate and not recovered from previous gifts so you have no need to sit on it for 7 years. 

DullGreyGuy

Cobbler_tone said:

p00hsticks said:

They just need to document who is giving what to whom (probably better if each parent gives £10k unless one has much more limited life expectancy) somewhere where whoever is the executor to their wills can find it easily

I'm assuming they can gift me £3,000 each within the allowance and then need to stay with me for the next 7 years.

No, at £3k, assuming they gift nothing else to anyone else, then they can pop their clogs tomorrow and it's all fine. The 7 year rule only applies if the total gifts in a year exceeds £3k 

Cobbler_tone

DullGreyGuy said:

Cobbler_tone said:

p00hsticks said:

They just need to document who is giving what to whom (probably better if each parent gives £10k unless one has much more limited life expectancy) somewhere where whoever is the executor to their wills can find it easily

I'm assuming they can gift me £3,000 each within the allowance and then need to stay with me for the next 7 years.

No, at £3k, assuming they gift nothing else to anyone else, then they can pop their clogs tomorrow and it's all fine. The 7 year rule only applies if the total gifts in a year exceeds £3k 

Poorly worded, my bad. I meant £3k each out of the £10k each. Sounds as though they can actually gift me £6k each (from last year) so wouldn't be much exposure...that is if IHT every became an issue.

Keep_pedalling

Cobbler_tone said:

DullGreyGuy said:

Cobbler_tone said:

p00hsticks said:

They just need to document who is giving what to whom (probably better if each parent gives £10k unless one has much more limited life expectancy) somewhere where whoever is the executor to their wills can find it easily

I'm assuming they can gift me £3,000 each within the allowance and then need to stay with me for the next 7 years.

No, at £3k, assuming they gift nothing else to anyone else, then they can pop their clogs tomorrow and it's all fine. The 7 year rule only applies if the total gifts in a year exceeds £3k 

Poorly worded, my bad. I meant £3k each out of the £10k each. Sounds as though they can actually gift me £6k each (from last year) so wouldn't be much exposure...that is if IHT ever became an issue.

Gifting never has a negative impact on IHT (unless you give so much away there is nothing left to pay the bill) at worst it means the same amount of IHT is due as it would have been no gifts had been made.