Inheritance Tax Gift Query

itsninja

I'm considering giving my son a large lump son, for example £100,000, to hopefully live seven years and remove from inheritance tax. If I die within seven years passing on my whole estate to my wife, what happens to the gift ?:

a. Nothing and can then be forgotten, estate has been passed onto my wife.

b. Chargeable in some way ?

c. Becomes chargeable if my wife then goes on to do die within the seven year time frame.

Thank You

Keep_pedalling

If you die within 7 years then this would reduce the amount of transferable NRB an be passed to your wife’s estate. No tax would be payable on your death but the total exemptions available to her estate would reduce from £1M to £900k.

You say your son, is he from a previous relationship? Do you have a will in place?

Marcon

If you die within 7 years then this would reduce the amount of transferable NRB an be passed to your wife’s estate. No tax would be payable on your death but the total exemptions available to her estate would reduce from £1M to £900k.

….depending on the value of the estate(s) concerned. Well explained here:

Source: https://techzone.aberdeenadviser.com/public/iht-est-plan/residence-nil-rate-band-guide

itsninja

https://forums.moneysavingexpert.com/discussion/comment/82074924#Comment_82074924

Thank you for your reply. My wife and I currently have a mirror will leaving all our assets to each other. Would the 100K reduction in exemptions reduce the nearer my death gets to seven years. Additionally if this is a gift from a joint account I assume this would be considered a gift of 50K each ?

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/82074973#Comment_82074973

There is no taper relief for gifts totalling below your NRB (£325k), yes if you gift from a joint account it is a joint gift. If one of you is much older than the other or have life limiting health issues then it is possibly a good idea to make a sole gift from the person least likely to die within 7 years.

You might also consider term life insurance to cover any IHT relating to untimely early deaths.