Inheritance Tax: Save £100,000s with simple advanced planning Article Discussion

Former_MSE_Natasha · 26 June 2007 at 8:45PM

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Inheritance Tax: How to avoid IHT Article

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Save4ArainyDay · 26 June 2007 at 9:19PM

My parents sought help with IHT from their Bank (Lloyds). They are under the impression that the cost is £20000 with an annual maintenance fee of £500 to set up and maintain a Discretionary Inheritance Trust. I am guessing that their total estate would not be valued at more than £400,000.
£20K???? This cannot be right.
Can anyone give me an estimate of what the costs are likely to be so that I can advise my parents.
I would like them to see a Tax Specialist rather than their Solicitor because their chap is a a good all rounder when it comes to house conveyancing etc but is not a specialist when it comes to tax.
All help much appreciated

Tuddy · 26 June 2007 at 11:43PM

Hi there, I have just gone through this with my parents last week with an estate value off in the region of £900K & saving IHT was high on the agenda. We have done the planning through 'Halifax' finanial services and they will set up all the trust plans needed FREE of charge and the plans they go into are very low management fees also. They have also recommended a telephone will service which I am currently reveiwing who will only charge about £160 to set up two wills, fantastic considering what the local solictor would charge.

There is no reason that I can see why Lloyds should charge you anything, get on the phone to Halifax or others and check it out, don't through away your parents hard earnt cash. Hope this is of help and good luck.

sanfly · 27 June 2007 at 11:42AM

Hi tuddy, would be interested in who the telephone will service is that halifax recommended..............cheers

Snappit · 27 June 2007 at 5:29PM

I am in the process of purchasing my parents property with some of the equity being gifted to me. I believe we will have a deed of trust to safeguard the home and I have been told to find out about POAT Pre-owned asset tax. Having read articles on the internet, I still do not understand it. Can anyone give any explanation in laymans terms? I just want to get the jist of it before paying for professional advice.

flossy44 · 27 June 2007 at 7:35PM

I have, with my husband just been to a solicitor to make wills and change our land registary entry to tenants in common, we have not set up trusts as we only have property and not pots of money. As the house is worth in excess of £400,000 my daughter would of had to pay tax but as tenants in common if myself or my husband dies half would come to myself and the other half to our daughter, she cannot however make us sell the house.

The total charge for setting this up was £205 + vat

harryhound · 28 June 2007 at 1:12AM

Hi Flossy,

Welcome to the MSE forum.

My father, by accident split the family house between our mother and us children, by dying intestate. Under the then rules, he saved us children a small fortune in tax.

However, my late mother was always a bit "twitchy" about not having complete control over the house.

I have a DIY will that does the same for my children.
What it really comes down to is: can you trust your children.

Did your solicitor discuss the position should your daughter (1) go bankrupt,
(2) get divorced ?

I would be interested to know how he protected your home in these instances.

Harry.

colink38 · 29 June 2007 at 10:10AM

The process can be quite cheap, for example http://www.tenants-in-common.co.uk/
offer an on-line service for £49, and claim a Saga endorsement of some form.

The benefits of this seem quite clear, even if no wills have been made, but there must be some disadvantages otherwise everyone would do it to minimise IHT.
Can one tenant stop a house sale, or force it to happen? Can the kids force or stop a sale after one parent dies? Can the scheme be reversed?

paysa_2 · 2 July 2007 at 12:28PM

How do we know if my husband and I are tenants in common?

Just reading out land registery and am not sure what I should be looking for.

Thanks

harryhound · 6 July 2007 at 12:56PM

paysa wrote: »

How do we know if my husband and I are tenants in common?

Just reading out land registry and am not sure what I should be looking for.

Thanks

Come on some lawyer out there, answer the question.

I don't want to have a go at explaining the difference between a maximum of four LEGAL owners and A TRUST FOR SALE and if the Land Registry really cares about the trust part; I might get it slightly wrong.

All I can really say is that English law's system, of having a maximum of 4 LEGAL owners and possibly many beneficiaries of the resulting EQUITABLE interest, is much better than the French system where a dozen relatives end up with a share and are still arguing about the future of the property when the roof falls in.

Harry.

Here is the Financial Times having a go at explaining - If you find that the survivor cannot alone sell the land; it looks like a tenancy in common ! (Read down to the second question)

http://www.ft.com/cms/s/d6d1e2cc-1e20-11db-9877-0000779e2340.html

angelika_2 · 9 July 2007 at 9:43AM

My Parents currently live in Germany but are UK citizens and have assests in the UK plus a house in Germany, they are aware that they have to pay inheritance tax in Germany on thier house in Germany but would they also have to pay inheritance tax in the UK on this property or will the assets in this country be taxed here - does anyone have any idea of where I could find out information on this or do you have an answer. Is there any way they can avoid paying a double tax bill they are not wealthy in today's terms (approx £300,000)

Inheritance Tax: Save £100,000s with simple advanced planning Article Discussion

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