Transferring Shares to Children worried about getting Taxed

LouiseAH

We are thinking about Transferring the shares we own into our children's names. The shares are currently in a joint account with my Husband. If either me or my Husband pass away within the next 7 years will there be tax to be paid or is it only if both of us pass away. 

Nomunnofun1

LouiseAH said:

We are thinking about Transferring the shares we own into our children's names. The shares are currently in a joint account with my Husband. If either me or my Husband pass away within the next 7 years will there be tax to be paid or is it only if both of us pass away. 

Is your estate likely to be sufficient to be liable to inheritance tax - could be up to £1 million free of taxation ?

Have you considered the capital gains tax implications on the transfer?

LouiseAH

Thanks for your reply. I havent considered the capital gains tax implications. At the time of transfer if there is a profit on the shares. Will capital gains tax have to be paid?

Nomunnofun1

LouiseAH said:

Thanks for your reply. I havent considered the capital gains tax implications. At the time of transfer if there is a profit on the shares. Will capital gains tax have to be paid?

What are they worth and what did they cost?

Is your future estate likely to be near the threshold?

LouiseAH

There is about £10,000 in profit on the shares at todays value. Yes future estate will be above the threshold.

Nomunnofun1

LouiseAH said:

There is about £10,000 in profit on the shares at today’s value. Yes future estate will be above the threshold.

If they are in joint names why not transfer half now and half after April 2025? You each would have a gain of £2500 in two tax years - nothing to pay. 

The shares will remain part of your estate if you die within seven years but that would remain the case if you didn’t gift the shares (as you would still hold them). 

However, you each have an annual gift exemption of £3000 PLUS £3000 if you didn’t gift last tax year. Another £3000 is available at 6th April. Total £18000. 

That might cover most of the gift proceeds. 

Brie

Don't forget that if you need help with care from your local council a transfer such as this might be considered deliberate deprivation of assets.  There's no time limit on this and so if you need care they will include the share value as part of your savings/assets.  It can mean that they may go to your children to pay fees if you are unable to. 

LouiseAH

Nomunnofun1 said:

LouiseAH said:

There is about £10,000 in profit on the shares at today’s value. Yes future estate will be above the threshold.

If they are in joint names why not transfer half now and half after April 2025? You each would have a gain of £2500 in two tax years - nothing to pay. 

The shares will remain part of your estate if you die within seven years but that would remain the case if you didn’t gift the shares (as you would still hold them). 

However, you each have an annual gift exemption of £3000 PLUS £3000 if you didn’t gift last tax year. Another £3000 is available at 6th April. Total £18000. 

That might cover most of the gift proceeds. 

Thanks for the great info. What would happen if one of us passed away within 7 years of gifting the shares and the remaining partner lived longer than 7 years. Would the shares then not be part of the estate at the time of the remaining partner passing away and the estate being sorted out.

LouiseAH

Brie said:

Don't forget that if you need help with care from your local council a transfer such as this might be considered deliberate deprivation of assets.  There's no time limit on this and so if you need care they will include the share value as part of your savings/assets.  It can mean that they may go to your children to pay fees if you are unable to. 

Thanks for the information. Another important point to consider.

DRS1

LouiseAH said:

Nomunnofun1 said:

LouiseAH said:

There is about £10,000 in profit on the shares at today’s value. Yes future estate will be above the threshold.

If they are in joint names why not transfer half now and half after April 2025? You each would have a gain of £2500 in two tax years - nothing to pay. 

The shares will remain part of your estate if you die within seven years but that would remain the case if you didn’t gift the shares (as you would still hold them). 

However, you each have an annual gift exemption of £3000 PLUS £3000 if you didn’t gift last tax year. Another £3000 is available at 6th April. Total £18000. 

That might cover most of the gift proceeds. 

Thanks for the great info. What would happen if one of us passed away within 7 years of gifting the shares and the remaining partner lived longer than 7 years. Would the shares then not be part of the estate at the time of the remaining partner passing away and the estate being sorted out.

If you have got the gifts within the £3k exemption mentioned above then you don't need to worry about the 7 years.

Nomunnofun1

DRS1 said:

LouiseAH said:

Nomunnofun1 said:

LouiseAH said:

There is about £10,000 in profit on the shares at today’s value. Yes future estate will be above the threshold.

If they are in joint names why not transfer half now and half after April 2025? You each would have a gain of £2500 in two tax years - nothing to pay. 

The shares will remain part of your estate if you die within seven years but that would remain the case if you didn’t gift the shares (as you would still hold them). 

However, you each have an annual gift exemption of £3000 PLUS £3000 if you didn’t gift last tax year. Another £3000 is available at 6th April. Total £18000. 

That might cover most of the gift proceeds. 

Thanks for the great info. What would happen if one of us passed away within 7 years of gifting the shares and the remaining partner lived longer than 7 years. Would the shares then not be part of the estate at the time of the remaining partner passing away and the estate being sorted out.

If you have got the gifts within the £3k exemption mentioned above then you don't need to worry about the 7 years.

Yes - but the value might be £30000 with the original cost £20000, for example.