Some advice on isas and shares

davidr99

I'm wanting some advice on investments for my mother-in-law about my father in-law. He is in a care home with vascular dementia and is not expected to live for more than a year. I presume it is not really worth opening an isa in his name as we are likely have to close it before it matures. Also, he has about £30,000 in Astrazeneca shares, again I presume it is not worth selling these as we would pay CGT on them. I should add that there is no problem funding his care homes fees for the time he will be in there. I'd be grateful for advice I could give to my mother-in-law.

Woodstok2000

I think an ISA can be transferred between spouses after one passes away, so if your MIL will have used her own allowance this may be worth looking at:

https://moneyfactscompare.co.uk/isa/guides/the-rules-on-inheriting-isas/

BreakingGlass

https://forums.moneysavingexpert.com/discussion/comment/82179563#Comment_82179563

A husband or wife actually inherits the ISA allowance rather than the actual money. Theoretically the money could be left to someone else according to the Will.

But it's well worth doing so that your mother in law gets the extra £20k ISA allowance - I have helped relatives with this twice in the last few years and it's quite straightforward as long as you find a new provider who allows this extra allowance to be transferred to them. Nationwide were easy to deal with.

tom192

You can have an easy access cash ISA that doesn't mature as such which you can just access as you need. They are not just fixed rate ones.

Flexible cash ISAs are even better as they allow you to replace funds within the same tax year

friolento

Small but important hurdle to take if you someone wants to open any bank account for another person, or sell shares owned by the other person, or to make any financial transactions for another person: they need to have Power Of Attorney.

davidr99

Thanks for the replies. I'll think it will be worth opening as isa as it can be transferred after death. Still not sure about the shares, I assume that best to hold on to them as I assume no tax is paid if they are part of the estate and the estate passes to the spouse

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82179642#Comment_82179642

Putting aside any tax issues, holding individual company shares is a rather risky investment. Some bad news about Astra Zeneca could see the price dropping rapidly. So for the long term it might be better to sell them and invest in a multi asset fund or similar.

FrugaiMacDugal

There is a CGT annual tax free allowance of £3000, so could sell some this tax year and some after 5th April next year.

Your FiL could transfer 50% of shares to MiL then both will have the £3000 tax free allowance to use.

davidr99

https://forums.moneysavingexpert.com/discussion/comment/82179906#Comment_82179906

The problem with the shares is that my FiL is only expected to live a few months and somebody suggested to me to sell them soon to ease the admin burden. But I believe that they would be due to CGT if sold now whereas if they become part of his estate which would go to my MiL then less tax is due. I maybe wrong on this. He has had the shares a very long time and they are worth about £30,000. Like I said earlier they don't need the money from them to fund the care home fees, it's just a question of when is the best ttime to sell them or not.

eskbanker

somebody suggested to me to sell them soon to ease the admin burden

How would selling now ease the admin burden?

As above, it's a bit of a gamble either way - a substantial holding in a single company is a high risk investment, but selling now sounds like it would crystallise a CGT liability that wouldn't arise if sold after his death. Do you have access to the acquisition cost to establish how much CGT would be due?

pochisoldi

https://forums.moneysavingexpert.com/discussion/comment/82180189#Comment_82180189

If non-ISA shares are to be inherited by the spouse:

• No CGT due on death
• No IHT when passing to spouse
• Base cost for CGT gets reset to the value on death (the probate value)

For completeness, also note that transferring the shares before death results in:

• No CGT on transfer between spouses
• IHT becomes an irrelevance
• Base cost for CGT remains unchanged

In short, sell if you need to sell (e.g. partial sale to make use of CGT allowance whilst alive), otherwise keep, inherit, sell.

Note that this ignores the "eggs in one basket" risks stated elsewhere - addressing that could involve selling enough shares to make use of FIL's CGT allowance, transferring a similar quantity to MIL to make use of her allowance. If possible (and if circumstances & the budget permit) rinse and repeat in the next tax year, to take £12000 of capital gains.

Further hint - if there are any unused carried forward capital losses, then it makes sense to use them as they become useless post mortem.