IHT gift from a joint account, keeping simple records/etc

UnsureAboutthis

Hello. Please help with the following.

FYI: Over the years we have been married (35+ years), we have earned similar amounts of money.
We have had for years, almost everything in joint names, the home, btl, all saving
accounts, plus the current accounts were joined up into a joint account with the same bank when we
both took early retirement. (I managed the insurance for the properties, cars, warranties,etc,etc)
Only the cars are not in joint names, but the money came from the joint bank accounts.
(money-wise, only the ISA's, cash ISA's are in separate names but we hold almost equal amounts in those as well as with the premium bonds, and we see them as our joint money)

I manage the banking/bills etc as my OH finds it very hard to grasp since we went online
and almost every bank closed within a few miles of our home. Like a large minority of older people, one-half of the married couple sticks to some tasks, and the other to others.

My OH is always made fully aware and verbal agreement is always reached before any gifts, cash withdrwawals etc.

We made relatively substantial (to us, ie more than several k's) gifts about 8 years ago, ie from the joint accounts - so I am safely assuming this is outside the IHT.

We recently made gifts of / k's to our children and a few k's each to our grandkids.
I made almost ll of the transactions; there may be one or two where it was my OH when I
was trying to teach the OH how to use the sytem safely, but she was not confident so I carried on doing the joint transfers.)


I hope I have not confused you with my question. Help requested is:

Can we both sign a written paper with our full names, DoB's, address and sign these
stating that all
monies we gift as deemed to be in equal amounts, regardless of which one of the married couple's actions, until this document is superseded, or something like that

I find solicitors arrogant, a waste of money/time, and we are just can't
be bothered making appointments, going and doing this.

Anyone here direct us to wording in plain English which covers the above, or who to contact online
professional with this, please?

Lectures will be ignored, and all sincere help/recommendations/guidance is appreciated
and will be actioned at our own full risk,. Thank you. (I'm happy to clarify, but I beleive you have the picture of how we operate our finances.)


PS: Everything we own/etc, since we have been married, there is an electronic trail ie salries from our
employers, rents, interest, and especially since we retired early about ... years ago, the incomes have been almost 100% similar.  Yes, we do fall into the IHT rules as it stands.

PPS: The joint accounts are single signature only ie, one of us could in theory/practive empty the
account and run off with it and the police could do nothing about it. Therefore, this was our beleife, it was a matter of trust, 50/50 actions by a single signature.

I know of many we know, ie older generations, where is is one half of the marriage who operates the finances. In hindsight, it would have been easier if my OH was helped with making the gists online.
The cars we have and other things, almost as good as 50/50 contribution over the 35+ years of marriage

Keep_pedalling

You don’t need any of that, gifts from joint accounts of a married couple are joint gifts. We have done exactly the same thing and the only thing we keep is a spreadsheet documenting all our gifts from the last 7 years and where for instance we gave a £10k gift £5k is allocated to each of us on the spreadsheet.

UnsureAboutthis

Keep_pedalling said:

You don’t need any of that, gifts from joint accounts of a married couple are joint gifts. We have done exactly the same thing and the only thing we keep is a spreadsheet documenting all our gifts from the last 7 years and where for instance we gave a £10k gift £5k is allocated to each of us on the spreadsheet.

Appreciated. We don't keep a record, other than since going online and I have a banking app for the current account/joint account where all money comes in and out via single signature - so my isa will go in there and then possiblyly somewhere else. Same applies to my OH - all of the money/big cash gifts go via our main bank, joint current account.

Since going online, I do write, EG, "gift to name/initials of our children/grandkids and their surname."

We could draw up a list, ie see what we have done during the past 3/4 years.
The main bulk of the cash gifts, they passed the IHT test a year ago ie it was about 8 years ago in July to August of this year.

Another thing worries us, care home fees and the money we gave away in the recent few months is notable
to many ordinary working/early retired peoplelike us, however, we still have cash, rental and main home so it's not a problem and were are realtively fit, ie cant do the 4 minute mile but able to manage a few miles of walking, climbing a few hundred steps in one go/etc/etc

Keep_pedalling

You should keep a record to make life simple for your executors.

As you seem to still have plenty of assets there should no need to worry about care costs, just make keep ample back to avoid having to rely on a cash strapped LA. We have made sure we can fund a live in carer (first choice) or if not practicable the best residential we can find.

UnsureAboutthis

Keep_pedalling said:

You should keep a record to make life simple for your executors.

As you seem to still have plenty of assets there should no need to worry about care costs, just make keep ample back to avoid having to rely on a cash strapped LA. We have made sure we can fund a live in carer (first choice) or if not practicable the best residential we can find.

Thanks. I looked on my app. The records on that go back to 2020 where when I/we made the cash gifts to our children and grandkids, the word "Gift" came with about 50 entries - I've written those down and sent took pictures and sent them to our kids for their recors and will keep the paper with the important papers.
It's all from the one bank we have been with ie current account and now joint account since we early retired. 

The much, much larger gists passed the 7 years IHT rules a year ago so we are no botthered about them but in bween the 7 years passing and about 2018/19, I recall makeing cash gist of many k's but the app does not that far back and there is no easy route to record them but I'm sure I did write, "gifts" and they were done online but not the app and even the online record dont go that far back I think.

poseidon1

Ordinarily someone would have chipped in by now and referred you to page 8 of IHT 403 as an appropriate template to follow to improve the chances of a successful gifts out of surplus income exemption claim by your future executors.

See the form below 

https://assets.publishing.service.gov.uk/media/5f60b44cd3bf7f7234487bf0/IHT403-05-20.pdf

Documenting the gifts is only half the battle, your executors proving they were surplus income after deducting your annual living costs is the other important side of the equation. The information from IHT 403 is what HMRC will require as proof.

Remember, HMRC have a rather arbitrary rule of thumb that undistributed income after 2 years has elapsed will have been capitalised ( so no longer income), unless there is compelling evidence  to the contrary.

UnsureAboutthis

poseidon1 said:

Ordinarily someone would have chipped in by now and referred you to page 8 of IHT 403 as an appropriate template to follow to improve the chances of a successful gifts out of surplus income exemption claim by your future executors.

See the form below 

https://assets.publishing.service.gov.uk/media/5f60b44cd3bf7f7234487bf0/IHT403-05-20.pdf

Documenting the gifts is only half the battle, your executors proving they were surplus income after deducting your annual living costs is the other important side of the equation. The information from IHT 403 is what HMRC will require as proof.

Remember, HMRC have a rather arbitrary rule of thumb that undistributed income after 2 years has elapsed will have been capitalised ( so no longer income), unless there is compelling evidence  to the contrary.

The savings were accumaulated over the years and 90%+ of it when we got married via working/paye, then rental income, all joint names.
We have surplus income now but we do not gift that at the moment as we are sacustomised to having a very good chusion for a rainy day.
Thanks for your help.

poseidon1

UnsureAboutthis said:

poseidon1 said:

Ordinarily someone would have chipped in by now and referred you to page 8 of IHT 403 as an appropriate template to follow to improve the chances of a successful gifts out of surplus income exemption claim by your future executors.

See the form below 

https://assets.publishing.service.gov.uk/media/5f60b44cd3bf7f7234487bf0/IHT403-05-20.pdf

Documenting the gifts is only half the battle, your executors proving they were surplus income after deducting your annual living costs is the other important side of the equation. The information from IHT 403 is what HMRC will require as proof.

Remember, HMRC have a rather arbitrary rule of thumb that undistributed income after 2 years has elapsed will have been capitalised ( so no longer income), unless there is compelling evidence  to the contrary.

The savings were accumaulated over the years and 90%+ of it when we got married via working/paye, then rental income, all joint names.
We have surplus income now but we do not gift that at the moment as we are sacustomised to having a very good chusion for a rainy day.
Thanks for your help.

Unless I misunderstand what you are saying, it sounds like you have been gifting from accumulated savings ( ie capital) so the necessary HMRC conditions for an eventual valid claim for the gifts out of surplus income exemption are not being met. 

If as you say you are not gifting from your annual surplus income at the moment, then there also appears to be no 'regular pattern' which would be another hallmark of the exemption. 

UnsureAboutthis

poseidon1 said:

UnsureAboutthis said:

poseidon1 said:

Ordinarily someone would have chipped in by now and referred you to page 8 of IHT 403 as an appropriate template to follow to improve the chances of a successful gifts out of surplus income exemption claim by your future executors.

See the form below 

https://assets.publishing.service.gov.uk/media/5f60b44cd3bf7f7234487bf0/IHT403-05-20.pdf

Documenting the gifts is only half the battle, your executors proving they were surplus income after deducting your annual living costs is the other important side of the equation. The information from IHT 403 is what HMRC will require as proof.

Remember, HMRC have a rather arbitrary rule of thumb that undistributed income after 2 years has elapsed will have been capitalised ( so no longer income), unless there is compelling evidence  to the contrary.

The savings were accumaulated over the years and 90%+ of it when we got married via working/paye, then rental income, all joint names.
We have surplus income now but we do not gift that at the moment as we are sacustomised to having a very good chusion for a rainy day.
Thanks for your help.

Unless I misunderstand what you are saying, it sounds like you have been gifting from accumulated savings ( ie capital) so the necessary HMRC conditions for an eventual valid claim for the gifts out of surplus income exemption are not being met. 

If as you say you are not gifting from your annual surplus income at the moment, then there also appears to be no 'regular pattern' which would be another hallmark of the exemption. 

I'm not sure I follow. We have excess income for as long as I can recall, hence the savings.
The larger gifts were well in excess of two years' income.

So, we are not gifting out of surplus income, as we have a decent amount in cash in ISAs and the like that is still in excess of at least a couple of years' savings of anual income, total, joint income.

We have also paid off on the property we lived in some years ago, and the rental ie before we took early retirment.


My understanding of gifting from excess income is, (I may be wrong) that you/couple
for exmaple have an income of lets say, 10k. You spend jointly on food/everything 9k, and the 1k left
is then gifted.

Albermarle

UnsureAboutthis said:

poseidon1 said:

UnsureAboutthis said:

poseidon1 said:

Ordinarily someone would have chipped in by now and referred you to page 8 of IHT 403 as an appropriate template to follow to improve the chances of a successful gifts out of surplus income exemption claim by your future executors.

See the form below 

https://assets.publishing.service.gov.uk/media/5f60b44cd3bf7f7234487bf0/IHT403-05-20.pdf

Documenting the gifts is only half the battle, your executors proving they were surplus income after deducting your annual living costs is the other important side of the equation. The information from IHT 403 is what HMRC will require as proof.

Remember, HMRC have a rather arbitrary rule of thumb that undistributed income after 2 years has elapsed will have been capitalised ( so no longer income), unless there is compelling evidence  to the contrary.

The savings were accumaulated over the years and 90%+ of it when we got married via working/paye, then rental income, all joint names.
We have surplus income now but we do not gift that at the moment as we are sacustomised to having a very good chusion for a rainy day.
Thanks for your help.

Unless I misunderstand what you are saying, it sounds like you have been gifting from accumulated savings ( ie capital) so the necessary HMRC conditions for an eventual valid claim for the gifts out of surplus income exemption are not being met. 

If as you say you are not gifting from your annual surplus income at the moment, then there also appears to be no 'regular pattern' which would be another hallmark of the exemption. 

I'm not sure I follow. We have excess income for as long as I can recall, hence the savings.
The larger gifts were well in excess of two years' income.

So, we are not gifting out of surplus income, as we have a decent amount in cash in ISAs and the like that is still in excess of at least a couple of years' savings of anual income, total, joint income.

We have also paid off on the property we lived in some years ago, and the rental ie before we took early retirment.


My understanding of gifting from excess income is, (I may be wrong) that you/couple
for exmaple have an income of lets say, 10k. You spend jointly on food/everything 9k, and the 1k left
is then gifted.

As far as I can see you are making adhoc gifts from savings/capital. As you already know they will count back into your estate(s) if you die within 7 years. This is the simplest way to make gifts. Gifting from income needs to be backed up with proof/detail that your executor can use to try and persuade HMRC that it was true gifting from income, as they have some discretion in the matter.
Presume you are aware also that you both can give away £3K a year, that will not be counted back into the estate.

poseidon1

UnsureAboutthis said:

poseidon1 said:

UnsureAboutthis said:

poseidon1 said:

Ordinarily someone would have chipped in by now and referred you to page 8 of IHT 403 as an appropriate template to follow to improve the chances of a successful gifts out of surplus income exemption claim by your future executors.

See the form below 

https://assets.publishing.service.gov.uk/media/5f60b44cd3bf7f7234487bf0/IHT403-05-20.pdf

Documenting the gifts is only half the battle, your executors proving they were surplus income after deducting your annual living costs is the other important side of the equation. The information from IHT 403 is what HMRC will require as proof.

Remember, HMRC have a rather arbitrary rule of thumb that undistributed income after 2 years has elapsed will have been capitalised ( so no longer income), unless there is compelling evidence  to the contrary.

The savings were accumaulated over the years and 90%+ of it when we got married via working/paye, then rental income, all joint names.
We have surplus income now but we do not gift that at the moment as we are sacustomised to having a very good chusion for a rainy day.
Thanks for your help.

Unless I misunderstand what you are saying, it sounds like you have been gifting from accumulated savings ( ie capital) so the necessary HMRC conditions for an eventual valid claim for the gifts out of surplus income exemption are not being met. 

If as you say you are not gifting from your annual surplus income at the moment, then there also appears to be no 'regular pattern' which would be another hallmark of the exemption. 

I'm not sure I follow. We have excess income for as long as I can recall, hence the savings.
The larger gifts were well in excess of two years' income.

So, we are not gifting out of surplus income, as we have a decent amount in cash in ISAs and the like that is still in excess of at least a couple of years' savings of anual income, total, joint income.

We have also paid off on the property we lived in some years ago, and the rental ie before we took early retirment.


My understanding of gifting from excess income is, (I may be wrong) that you/couple
for exmaple have an income of lets say, 10k. You spend jointly on food/everything 9k, and the 1k left
is then gifted.

Suggest you take the time  to research the technical criteria and conditions that apply for the gifts out of surplus income to be successfully claimed by executors. The guidance below from financial services firm Aberdeen is worth reading - 
 
https://techzone.aberdeenadviser.com/public/iht-est-plan/gifts-out-of-surplus-income

Pay attention to how joint gifts are viewed, and the fact that each party is considered separately with regard to their individual capacity to gift from their own surplus income after expenses.