Gifting from an inheritance

Pippin56

Hello, I'd be grateful for any thoughts/pointers on things to consider on the following.  I am the sole beneficiary of a friend's will.  He had an adult daughter that he is estranged from who he was adamant shouldn't receive anything.  He did say though it was up to me if I decided to give her something.  I am planning to give a portion of the money received from the sale of his house to his daughter once the estate is fully settled.  Presumably for the daughter, the money received will be seen as a gift from me, as the will gives everything to me, rather than an inheritance from her father?  What are the tax implications for her (and me?) of that and are there any special considerations for me to consider in the way in which I do it/threshold amounts or whatever? During a brief free call wtih a solicitor, they advised not telling her upfront I was planning to gift any of the money, as probate/settling estates can take quite a bit of time and I won't have her chasing me or wanting to see all accounts.  I'm the executor and making sure I keep good records of everything.  Thank you for all thoughts/advice/pointers.

RAS

Is there time to do a deed of variation, within 2 years of death? 

That would remove the money from your estate immediately and not leave a risk on IHT liabilities for your own estate if you died within the following 7 years.

Pippin56

Thanks RAS.  He died a couple of months ago so presumably there would be time, depending when the house sale goes through.  I will look into that, thank you.

Robin9

Just wondering if you might be opening a minefield here

Say you give her 10% -  she blows her top and says why not 25% ?

Pippin56

Yes I'm wanting to do the right thing and am also worried about that. I'm thinking doing it as an amount not a % as saying a % opens up the challenge to her asking to check that the % has been calculated correctly when it's purely discretionary from my point of view based on the will. 

Keep_pedalling

The estate will become a public record once probate has been granted so it does not matter if you do it as a fixed sum or a fixed sum. I don’t think this opens up more of a risk she can challenge the will whatever you do.

I would do it via a DoV if you do this to avoid complicating your own estate.

Pippin56

Thanks Keep Pedalling.  I'm thinking she would be more likely to want to look at all my calculations if I used a Deed of Variation and stated it would be xx% of the proceeds of the sale of the house, rather than £xx,xxx as a fixed sum.  As executor, presumably once the DoV is written I am then bound to carry out the terms and saying a fixed financial sum, which I will decide, once I know what the proceeds of the sale are, what the debts and expenses for the estate were, will be much more straight forward for me to adminster.  Thanks again all.

Pippin56

Hello again, selling the property relating to my friend’s estate is proving much more long winded than I’d thought. I’m now worried about making the 2 year deadline to do a Deed of Variation to give his estranged daughter a sum of money. I don’t know how much money will be left - how much the property will sell for, how much legal etc fees will be used up and how long I’ll keep having to pay the mortgage, council tax etc till it sells, so I darent set a sum in the Deed of Variation before the sale/fees have been settled. In case I can’t do a DoV in time, does anyone have any thoughts on what are the downsides of just giving a sum of money from my own inheritance to his estranged daughter - for both me and for her? Thanks so much.

Daniel54

In different circumstances,I am also nearing a situation with a property not selling and the window for a DoV narrowing.

I would suggest for you that the primary argument for a variation would be to keep the amount varied immediately outside of your own estate.This would apply if the full amount of the inheritance would push your own estate near to or over the IHT allowance your estate will have.

You could always do a DOV as a percentage of the final net property value,or as a fixed sum set low enough (50% of what you have in mind? ) of the asking price for the fixed amount never to be be insufficient.This could be topped up by gifting once the property is sold.

If IHT on your eventual estate is not going to be an issue,then there are good arguments for gifting now and finalising the obligations for which you have admirably taken responsibility.

Albermarle

As above the first thing to work out is whether your estate ( before giving the gift) is likely to be liable to IHT.

The amount of an estate not liable for IHT, depends on your personal circumstances. Are you married? have any children ?

Keep_pedalling

You can write the DoV anytime. The recipient does not even need to know you have made a deed of variation the only time anyone other than you needs to know about it is your executor on your death should you die within 7 years.

You are still making the gift the DoV just avoids the gift ever entering your estate for IHT purposes.