IHT - GWRoB - Complications

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/comment/82158044#Comment_82158044

My wife did say we might us a bit to pay for our furniture anyway. His response was "well, I I ask for the money back, you'll just have to make that shortfall up from somewhere else."

StewedApple

Does anyone have any thoughts?

Unfortunately, the media delights in creating fear around this issue (often out of all proportion to any real liability for most people), and your father-in-law is likely to be assailed by the usual panics and scares which they cycle through on a regular basis - which I suspect means he will return to the theme on the same regular basis.

Would he benefit / be amenable to professional planning as this might set his mind at rest.

Woodstok2000

https://forums.moneysavingexpert.com/discussion/comment/82158049#Comment_82158049

Advise him that won't be happening without a legally binding loan document, which would negate any tax benefit. You could also tell him you are just going to put it in a separate bank account and declare it as part of his estate when he dies.

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/comment/82158071#Comment_82158071

We have explained to him that what he proposed won't make any difference to any eventual IHT liability.

He was totally deaf to our comments and denied that there was such a thing as GWRoB.

Keep_pedalling

There is little he can do to reduce the IHT liability as far as the house is concerned unless he wants to downsize or take out equity release. What does he have in the way of liquid assets?

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82157746#Comment_82157746

Not a widower - divorced.

Not really sure on the value of his Estate. His bungalow about £650k plus whatever he has in bank accounts. No SIPP as he has DB pension.

Is he aware that if he leaves his bungalow to his children in his will, then his estate will benefit from the Residential nil rate band of £175K.

If so it means that the first £500K of his estate will have no IHT liability.

Not sure how old he is, or if he has any serious health problems, but care can be expensive and can so whittle down his money. Apart from the huge costs of care homes, if it ever came to that, even regular care at home can soon mount up.

Two carers a day coming twice a day for an hour each time, would cost about £35 K pa

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/comment/82158119#Comment_82158119

The bungalow is after he downsized earlier this year.

Not sure on his total liquid assets but he'll have about £100k from the house move realised after costs of moving. I think he had a comfortable level of savings before moving.

https://forums.moneysavingexpert.com/discussion/comment/82158120#Comment_82158120

I think he intends to leave bungalow to his two children.

81 and rudely good health currently.

Grumpy_chap

So this has been good discussion so far.

No-one has queried the premise that this this would fail as a PET and is captured as GWRoB. That simply means the value is included in any IHT calculation.

There seems no point in telling FiL again as he won't listen and it will only cause an argument.

When the time arrives and the Estate has to be determined as per the Will, does the value of the PBs get added back into the Estate and distributed accordingly? OR, does the Estate not include this value for the purposes of distribution (only IHT)?

Are we breaking any rules by my wife holding this as PBs?

What happens with any prizes received from the PBS?

- This is probably simple for a £50 prize. FiL would likely just say to my wife for us to go out for a meal.

- Might all be more contentious if a large prize is won.

J63320

Does FIL know your wife’s PB holders number? If so, he will be able to use the prize checker, so there will be no hiding any prizes. And if he doesn’t know her number and she refuses to tell him, that might cause a problem too.

J63320

Here’s a thought: I believe it’s possible to make voluntary payments to HMRC. Tell FIL that if he gives the money, that’s what you’ll do with it!