Gifting money to children before we die

Onelastbidder

My wife and I have mirror wills where if one of us dies the other inherits everything and when the surviving spouse dies everything goes to our son. Our estate is worth about £750K which includes a family home. I would like to gift our son £50K. My question is: would he have to pay tax on the gift when we have both gone, if I die while my wife is still alive or not at all as the total left would be under the combined IHT threshold?

Onelastbidder

In addition to the above I forgot to propose a scenario where I died within, say a year, of giving the gift. I am also aware and already taken advantage of, the £3K each gifting allowance each year.

webmasterpolo

Married couple leaving house to son, you would be entitled to the 1m allowance, with an estate of 750k there is no IHT to worry about. So the gift is completely tax free.

Do you have any pension pots? Labour intend to make these part of your estate as well in 2027, so if you do and they are over 250k your estate will suddenly become liable for IHT. In this case the gift to your son is tax free if you live the 7 years, if you do not then it would still be tax free to him as it would come out of the 1m allowance, meaning the estate would only have 950k allowance left and pay the 40% IHT on the rest.

HTH

-Web

Keep_pedalling

Gifting has no negative IHT consequence's at worse you estate pays the same IHT as it would have done if you had never made the gift.

You say you would like to make the gift, any reason why not a joint gift?

Onelastbidder

Thanks for the replies. No reason it would not be a joint gift, it would just come out of my bank account. Pensions sorted and not relevant anymore. I was just concerned that as the gift was in my name and in my initial bequest everything went to my wife, and then only after she passed would our son inherit.

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/81994125#Comment_81994125

If you have not already made the gift them make it from a joint account or forward half of to your wife for her to gift half separately. If already made then it is a sole gift from you.