Gifts with two donors to one donee - 7 year rule

WVAM

If a cash gift is given jointly by 2 grandparents i.e. more than one donor, how is the 7 year rule interpreted?
Does 7 years apply to the first to die or the second to die?

Haven't found the answer so far so posting here. Thanks for the help.

Nomunnofun1

Is the potential estate large enough to be subject to inheritance tax?

Albermarle

I think that if one grandparent died within 7 years, then the nil rate band they could pass on to the survivor would be reduced by the size of the gift.

So if they gave £50K each and one died within 7 years, the nil rate band that could be passed on would be reduced from £325K to £275K.

Better wait for someone else to confirm that though.

Keep_pedalling

Joint gifts are treated as two separate gifts for IHT purposes. Fo if one GP dies within 7 years 1/2 of the gift will be a failed PET. 

WVAM

Keep_pedalling said:

Joint gifts are treated as two separate gifts for IHT purposes. Fo if one GP dies within 7 years 1/2 of the gift will be a failed PET. 

That's very helpful. It means that it makes no difference if they are given as two individual gifts or as one joint gift.

WVAM

Albermarle said:

I think that if one grandparent died within 7 years, then the nil rate band they could pass on to the survivor would be reduced by the size of the gift.

So if they gave £50K each and one died within 7 years, the nil rate band that could be passed on would be reduced from £325K to £275K.

Better wait for someone else to confirm that though.

The estate is large enough for IHT. I'll look into this but would be helpful, as you say, if someone can confirm.

DRS1

How was the gift made?  Was it a transfer from a joint account?  Is there anything to say the joint account is not split 50/50?

silvercar

I read somewhere online that gifts from joint accounts should be considered as coming from the donors based on the monies they have put into the accounts. I don’t know how far back you are expected to go - I have a joint account with OH that was used to pay the deposit on offspring’s house buying. The account has been joint for 35 years!

Keep_pedalling

silvercar said:

I read somewhere online that gifts from joint accounts should be considered as coming from the donors based on the monies they have put into the accounts. I don’t know how far back you are expected to go - I have a joint account with OH that was used to pay the deposit on offspring’s house buying. The account has been joint for 35 years!

I am pretty sure that is not the case where they are coming from the joint account of a married couple even if there is only one earner. 

TheGreenFrog

To avoid any doubt, and if the donors are both still alive, get them to sign a document confirming amount of gift, date made and stating that it is a gift made by them both in equal shares.  To be kept by executors in case needed.

silvercar

Keep_pedalling said:

silvercar said:

I read somewhere online that gifts from joint accounts should be considered as coming from the donors based on the monies they have put into the accounts. I don’t know how far back you are expected to go - I have a joint account with OH that was used to pay the deposit on offspring’s house buying. The account has been joint for 35 years!

I am pretty sure that is not the case where they are coming from the joint account of a married couple even if there is only one earner. 

Discussed here: https://www.investorschronicle.co.uk/content/6f427892-9b48-57ac-95be-ed1441933fce