Gifts and the seven year rule

RonBargie

I am thinking of leaving a subsiantial gift to my grand chilgren, and I would like to keep this a secret until they are 25 years old, when I will probably be dead. I do not want to tell anybody about this, (as I want them to have a nice surprise), and just leave a note with my will telling my executor where the gifts can be located.

My question is this: If I keep the gifts in a bank vault with the receipt, but without anyone being aware of them until after my demise, will they be still classified as a gift or will they be included in my estate, assuming of course that seven years has passed since depositing them.

mta999

From memory a gift requires three elements: first you must intend it to be a gift, secondly it must be actually delivered to the recipient and thirdly the recipient must accept it as a gift

bobster2

Someone with more legal expertise will no doubt be along soon.

But I cannot see how these could be classed as gifts - there is no sense in which the gift has been delivered to and accepted by the recipient. The money would essentially still be in your possession - and only you would have access to it. You could just pop down to the bank - get it out of the vault and spend it as you wish. So there is no sense in which ownership has passed to the recipient.

Now put the money in a safe deposit box - give the recipient the only key - and make sure they receive a letter when they are 25 telling them where the box is - that might be different! 

HappyHarry

Have you considered a trust with your grandchildren as beneficiaries?

Grumpy_chap

RonBargie said:

I am thinking of leaving a subsiantial gift to my grand chilgren, and I would like to keep this a secret until they are 25 years old, when I will probably be dead. I do not want to tell anybody about this, (as I want them to have a nice surprise), and just leave a note with my will telling my executor where the gifts can be located.

My question is this: If I keep the gifts in a bank vault with the receipt, but without anyone being aware of them until after my demise, will they be still classified as a gift or will they be included in my estate, assuming of course that seven years has passed since depositing them.

The gift is not a gift until it is actually gifted.
The value remains in your estate with that proposal.  You might change your mind and use the money for anything else between now and your demise.

RonBargie

Thank you to everyone who replied. I thought that my plan was faulty,but I decided to check anyway. I need to move on to an alternative plan.

silvercar

You could open a savings or investment account in their name and not tell them about it. That way the gift has been made. Or create a trust fund for them.

p00hsticks

silvercar said:

You could open a savings or investment account in their name and not tell them about it. That way the gift has been made. Or create a trust fund for them.

Although savings in their name that they are unaware of could land them in trouble with DWP / HMRC if they start applying for means tested benefits such as Universal Credit. (I'm also not sure if it would have any impact on Studdent loans ?)

Keep_pedalling

I hope you were not thinking of depositing large amounts of cash in a safety deposit box, by the time they got the gift inflation would have eaten much of the value away. Another floor in the plan is that they. May never get the gift. The one person who knows about it could die or lose their mental capacity so forget about it.

it is actually not easy to set age limit over 18 on gifts and bequests. You could create a discretionary trust, but these are a pain to manage for the trustees and are subject to very high levels of taxation. Is you estate actually in IHT territory? Do you have a will in place?