Deed of variation

sheramber

fuzzzzy said:

I get what the OP means but maybe they should have set it out explicitly to their children in the form of a letter at the time.

They could have stated to their children that they were expecting to receive an inheritance from their recently deceased father which they intended to pass onto the children by way of a deed of variation. In order that the children could make use of their tax free allowances at the end of the 2024 to 2025 tax year they intended to advance them a loan which they would then expect to be repaid once the children received their grandfather's inheritance.

Which still adds  the amounts to his  estate for IHT. 

 By leaving the money with the children they drop out after 7 years. 

fuzzzzy

sheramber said:

fuzzzzy said:

I get what the OP means but maybe they should have set it out explicitly to their children in the form of a letter at the time.

They could have stated to their children that they were expecting to receive an inheritance from their recently deceased father which they intended to pass onto the children by way of a deed of variation. In order that the children could make use of their tax free allowances at the end of the 2024 to 2025 tax year they intended to advance them a loan which they would then expect to be repaid once the children received their grandfather's inheritance.

Which still adds  the amounts to his  estate for IHT. 

 By leaving the money with the children they drop out after 7 years. 

It depends on how far over the IHT threshold the estate is likely to be.

The OP is married. If he was to die within 7 years then his transferable nil rate band would drop to £285k.

If the £40k had been a loan then the transferable nil rate band would remain at £325k. If the estate is just hovering around the million mark then him and his wife could gift back the £40k in £6k chunks over a number of years or spend it.

Though considering the OP's youngish age it does not seem worth worrying about.