Defining and declaring gifts

Crazy_Badger

Hi gang, first time poster so be kind please - happy to be pointed in the direction if I need to go away and read be here’s the situation:

father passed away after a couple of years in a home with dementia. Only assets are his bank accounts. This amount is less than the IHT threshold (inherited his late wife’s allowance also). 

I’m now running the rule over his bank accounts statements and trying to discern what was spent and who on. He was of the analogue age so plenty of cheques referenced (which I think I can request the payee detail from the bank?). Total spend that either went to my siblings and, when added to the current estate, is still under the IHT threshold. 

Question is: the cross checking of cheque for £x leaving his account on nth of the month and same amount appearing in one of the siblings accounts on the same day is easy to attribute as a gift. If it didn’t hit any of our accounts is that deemed sufficient due diligence and allows for effectively ignoring the other transactions in order to submit an estate estimate as part of the probate submission or have I missed something?

None of the transactions are above say £5k on their own and in terms of overall spend there’s on average about £15k pa that don’t refer to standard living cost transactions. His pension income means that £15k pa did not affect his standard of life. 

Do I just estimate the gifts we can attribute and declare those?

Thanks for taking the time to read this stream of consciousness!

user1977

Unless you're running close to the IHT threshold I don't think you need to worry too much about it (or am I missing something?)

Brie

Only reason to check closely would be to ensure that you each get your fair share if you're not close to IHT territory.

bobster2

Brie said:

Only reason to check closely would be to ensure that you each get your fair share if you're not close to IHT territory.

Estate at death needs to be distributed according to the will - or the rules of intestacy.

It might not seem fair - but shares should not be adjusted to deviate from this in light of gifts given prior to death (unless all affected beneficiaries agree).

badmemory

I would agree but I would be concerned about "gifts" given by a person with dementia.

Keep_pedalling

I would not get too deep into this for the purposes of probate. If his estate (including gifts) is safely below £650k then it seems you already have enough info to submit probate and you don’t need to do an IHT return.

It seems he has given away aprox £105k in the last 7 years of which £21k will be exempt due to his annual £3k allowance. So if for example he had £500k in his bank accounts when he died then the estate value for probate would be £500k and for IHT purposes £584k.

The totally seperate issue is how has a man with dementia been able to make lifts in the last couple of years of his life? Were ant of these actually made by someone holding POA? 

Crazy_Badger

Hey gang, wow, such a positive engagement and asking all the right due dil questions on my dad’s behalf. Thank you and allow me to elaborate:

none of us have done badly by him, some better than others but end of the day, his cash to have spent on what he saw fit - and longer standing arrangements before the dementia came on or was noticeable. 

Since then, we all had POA and I had access to the internet banking and took the approach of:

His needs first so we used the £3k allowance solely for Christmas and birthday gifts. 

Any current direct debits were allowed to continue and we itemised anything we purchased on his behalf (Ring cameras for the house whilst he still had some semblance of independence with the aid of a carer/cleaner) etc.

So whilst his income could have allowed for more to be gifted without impacting QoL, it was played with a flat bat as per POA in spending for his interests (care came first and was not scrimped on) and not necessarily how *he* would have spent it on us. 

Hope this explains the background. 

As for the will, yup equal split and as I said before none of us have been denied, one needed more support than the other and whatever is left over to split, is what it is. 

Again thanks for the input guys