Just starting to look at Inheritance Tax - a few question...

Keep_pedalling

chubsta said:

I have a civil service db pension which I took early at 57, she has no pension but will receive a full state pension according to the modeller. It was always intended that the cash reserves she has would be her ‘pension’ but we don’t need it as I have done myriad projections based upon differing scenarios and none of them indicate we will ever be short of money. We seem to be in a position where we can maintain our lifestyles within our means going forward, to the point where I don’t see our cash reserves dwindling, or even if they did it would only be small amounts. 

We are also both in line for inheriting further properties from our parents but that is a further complication so don’t want think too much about that.
i never thought I would see the day where not having to worry about money means I need to worry about it…

We are in a similar situation in that our joint estates are in excess of £1M but our children have already been given substantial gifts and we continue to help out financially but we are not concerned that IHT. May need to be paid when we are both gone. What is of greater concern is that we have ample saving to get through our latter year, and that could be funding live in carers or funding high quality residential care if that is not practical.

We will both be able to leave £1M tax free and 60% of anything over that still goes to our loved ones so why worry about a relatively small amount of IHT?

chubsta

Keep_pedalling said:

chubsta said:

A further factor we will need to take into consideration will be potential future inheritances from parents, altogether likely to be around £400,000 in total in property, but I always prefer to plan with ‘knowns’ rather than unknowns and will adjust when or if that should happen. 

Trouble is, we are both very good at living within our means so don’t really have anything to spend extra money on!

You could always make a deed of variation to pass any inheritance on to the next generation which would prevent those inheritances entering your estates.

'a deed of variation' - that is something I have never heard of before, and exactly why I post on forums such as these! I will check out what they are and whether it would be suitable so thank you very much! We were intending to put all the cash into Cash ISA's (they are currently in very nice interest savings which has worked well for us) but after reading Martins email regarding the future of such things I guess that will now have to be reconsidered too. Good job I have plenty of time to research!

silvercar

Keep_pedalling said:

chubsta said:

I have a civil service db pension which I took early at 57, she has no pension but will receive a full state pension according to the modeller. It was always intended that the cash reserves she has would be her ‘pension’ but we don’t need it as I have done myriad projections based upon differing scenarios and none of them indicate we will ever be short of money. We seem to be in a position where we can maintain our lifestyles within our means going forward, to the point where I don’t see our cash reserves dwindling, or even if they did it would only be small amounts. 

We are also both in line for inheriting further properties from our parents but that is a further complication so don’t want think too much about that.
i never thought I would see the day where not having to worry about money means I need to worry about it…

We are in a similar situation in that our joint estates are in excess of £1M but our children have already been given substantial gifts and we continue to help out financially but we are not concerned that IHT. May need to be paid when we are both gone. What is of greater concern is that we have ample saving to get through our latter year, and that could be funding live in carers or funding high quality residential care if that is not practical.

We will both be able to leave £1M tax free and 60% of anything over that still goes to our loved ones so why worry about a relatively small amount of IHT?

Same here. 

Interesting conversation with parents (now in their late 80s) when we told them our intention was to do a deed of variation on any substantial inheritance. One set stamped their feet and said any variation was against what they wanted with their money. The other side then decided to rewrite their wills leaving substantial amounts directly to grandchildren, to ensure a disliked spouse of one of their children can’t get their grubby mitts on it. Had to be persuaded that it might not be a great idea, given that the child with the disliked spouse may need the money at some point.

Albermarle

chubsta said:

Keep_pedalling said:

chubsta said:

A further factor we will need to take into consideration will be potential future inheritances from parents, altogether likely to be around £400,000 in total in property, but I always prefer to plan with ‘knowns’ rather than unknowns and will adjust when or if that should happen. 

Trouble is, we are both very good at living within our means so don’t really have anything to spend extra money on!

You could always make a deed of variation to pass any inheritance on to the next generation which would prevent those inheritances entering your estates.

'a deed of variation' - that is something I have never heard of before, and exactly why I post on forums such as these! I will check out what they are and whether it would be suitable so thank you very much! We were intending to put all the cash into Cash ISA's (they are currently in very nice interest savings which has worked well for us) but after reading Martins email regarding speculation about the future of such things I guess that will might now have to be reconsidered too. Good job I have plenty of time to research!

Just a couple of small modificatons in bold.
In general it is best not to act on 'what might be', although preparing for it with research can do no harm.

chubsta

I currently have differing scenarios costed and printed out, taking into account different isa deposit limits etc. hopefully whatever happens going forward will not be a shock! 

Of course there are things I know, things I know I don’t know, and things I don’t know I don’t know but you can only do so much!

So far, all point to a comfortable retirement and plenty to leave, with the very strong likelihood of having too much - not a bad position to be in….

(watch something come out of the blue tomorow!)

Yorkie1

Two points occur:

1. OP, check whether you need to update your DB pension beneficiary nomination
2. For others to comment: OP does not have any children, but has step-children. Does this fact affect the maximum £1m IHT figure?

dales1

1. OP, check whether you need to update your DB pension beneficiary nomination
2. For others to comment: OP does not have any children, but has step-children. Does this fact affect the maximum £1m IHT figure?

If you google for IHT direct descendant, you will see on the gov.uk page that direct descendent also includes step-children, adopted children, foster children etc.

So the £1m IHT exemption is still available.