Making a large gift and IHT implications?

Sea_Shell

We only have niblings to leave our estate to too.

If they (our estate) have to pay IHT then so be it, they will still get to share a substantial sum.   

I personally wouldn't bother paying insurance premiums (which may be high due to age/health) just so they can inherit even more, especially when the estate can cover it.

macadam

Sea_Shell said:

We only have niblings to leave our estate to too.

If they (our estate) have to pay IHT then so be it, they will still get to share a substantial sum.   

I personally wouldn't bother paying insurance premiums (which may be high due to age/health) just so they can inherit even more, especially when the estate can cover it.

You make a good/valid point.

I think the cost of the insurance premiums will be the deciding factor.

bobster2

macadam said:

Sea_Shell said:

We only have niblings to leave our estate to too.

If they (our estate) have to pay IHT then so be it, they will still get to share a substantial sum.   

I personally wouldn't bother paying insurance premiums (which may be high due to age/health) just so they can inherit even more, especially when the estate can cover it.

You make a good/valid point.

I think the insurance premiums are going to be the deciding factor.

In my previous post I had your estate at £1million. If it's £900,000 then with a £200,000 gift you would be buying insurance (to cover the IHT for the gift amount) to ensure that your niece ended up inheriting £750,000 vs £670,000 in total (if you died within 7 years of the gift). So about 10% more.

Keep_pedalling

macadam said:

Sea_Shell said:

We only have niblings to leave our estate to too.

If they (our estate) have to pay IHT then so be it, they will still get to share a substantial sum.   

I personally wouldn't bother paying insurance premiums (which may be high due to age/health) just so they can inherit even more, especially when the estate can cover it.

You make a good/valid point.

I think the insurance premiums are going to be the deciding factor.

We did this after gifting a 6 figure sum to our children when we were in our mid 60s, the premiums were around £20 per month but that would be to cover both of us dying  within 7 years, and the policy was set up through our financial advisor. 

Our estate is still in IHT territory but we are OK with that, a chunk of that money might be needed for care costs, and we want the ability to have total control over that we zero LA input. Live in carers are not cheap and neither are the best local residential care homes.

Marcon

Have you looked at making gifts out of income? Loads of info available - eg https://www.mandg.com/wealth/adviser-services/tech-matters/iht-and-estate-planning/exemptions-and-relief/normal-expenditure-out-of-income

and 

https://hwfisher.co.uk/gifts-out-of-surplus-income-three-rules-to-remember/

or maybe taking some proper professional advice...?

poseidon1

Keep_pedalling said:

macadam said:

Sea_Shell said:

We only have niblings to leave our estate to too.

If they (our estate) have to pay IHT then so be it, they will still get to share a substantial sum.   

I personally wouldn't bother paying insurance premiums (which may be high due to age/health) just so they can inherit even more, especially when the estate can cover it.

You make a good/valid point.

I think the insurance premiums are going to be the deciding factor.

We did this after gifting a 6 figure sum to our children when we were in our mid 60s, the premiums were around £20 per month but that would be to cover both of us dying  within 7 years, and the policy was set up through our financial advisor. 

Our estate is still in IHT territory but we are OK with that, a chunk of that money might be needed for care costs, and we want the ability to have total control over that we zero LA input. Live in carers are not cheap and neither are the best local residential care homes.

That is very helpful insight into the  potential actual cost of insurance for these 7 year IHT protection situations. My sense is some people are under the impression /assumption ( without having made specific enquiries themselves) that the cost can be a lot higher for those age 60 plus.

Hopefully your experience will prompt others to look at this option seriously in conjunction with substantial lifetime gifts.

Keep_pedalling

poseidon1 said:

Keep_pedalling said:

macadam said:

Sea_Shell said:

We only have niblings to leave our estate to too.

If they (our estate) have to pay IHT then so be it, they will still get to share a substantial sum.   

I personally wouldn't bother paying insurance premiums (which may be high due to age/health) just so they can inherit even more, especially when the estate can cover it.

You make a good/valid point.

I think the insurance premiums are going to be the deciding factor.

We did this after gifting a 6 figure sum to our children when we were in our mid 60s, the premiums were around £20 per month but that would be to cover both of us dying  within 7 years, and the policy was set up through our financial advisor. 

Our estate is still in IHT territory but we are OK with that, a chunk of that money might be needed for care costs, and we want the ability to have total control over that we zero LA input. Live in carers are not cheap and neither are the best local residential care homes.

That is very helpful insight into the  potential actual cost of insurance for these 7 year IHT protection situations. My sense is some people are under the impression /assumption ( without having made specific enquiries themselves) that the cost can be a lot higher for those age 60 plus.

Hopefully your experience will prompt others to look at this option seriously in conjunction with substantial lifetime gifts.

We have let the policy continue to run after the initial term and it now costs us £49 per month into our early 70s, 

macadam

Marcon said:

Have you looked at making gifts out of income? Loads of info available - eg https://www.mandg.com/wealth/adviser-services/tech-matters/iht-and-estate-planning/exemptions-and-relief/normal-expenditure-out-of-income

and 

https://hwfisher.co.uk/gifts-out-of-surplus-income-three-rules-to-remember/

or maybe taking some proper professional advice...?

Thanks for the Links, but I'm currently suffering from Information Overload just now from watching too many YouTube videos on gifting & IHT.

Booked a half hour free consultation with a legal firm to discuss options.

Keep_pedalling

I would have thought an IFA would be a better option than a solicitor. 

ukdw

I can understand why a term insurance policy could be useful in offsetting the IHT costs if someone dies with 7 years of making a gift.

Based on posts by @Keep_pedalling It looks like the cost of the insurance on a 6 figure gift i.e, an at least £40k liability could be as low as £20 a month (or £240 a year for people in their 60s and £600 a year in their 70s for a gain to the recipients of at least £40k.

What I am wondering is whether this type of insurance would be even more beneficial to smaller estates without any IHT liability - where the extra £40k (or whatever amount is insured) would then make even more difference in percentage terms to the amount that recipients receive.