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

Hello, i live with my long term partner but we are not married, we have flat which we own jointly and is rented out as an investment. My partner owns the house we live in and its in his name alone, there is no mortgage on either property.

My partner wants to make sure that I get everything when he dies and we are making wills (leaving everything to each other as we don't have any kids) However we are worried about IHT as his house is probably worth about £500k.

One thought that we have is just getting married, would this solve the IHT issue, if so it seems pretty simple and cheap, cheap is important as we have a very low income.

getmore4less wrote: »

that will solve a lot of issues but potentially not all of them.

Whats the total asset base of both of you.

Estimated max is £8-900k including both properties and savings etc.

£20,000?..... Hopefully your parents have not gone ahead with this yet? What was the reason for your parents wanting to set up a discretionary trust in the first place? If it was JUST to minimise IHT, and their total estate is around £400,000, they do not even come anywhere near having to pay any IHT so this trust will be a total waste of their money unless of course they prefer to give that money to Lloyds instead of their beneficiaries?! :rotfl:

If a property is involved and it's being handed down to direct descendants, their estate will need to be worth over £850,000 before any IHT becomes due (rising to £1m by 2020). Even if it's not involving a property, their total estate would need to be worth over £650,000 before any IHT would become due. So, based on what you have said, they do not even have an IHT liability.

Banks are notorious for doing this! Unless there was a very good other reason, I can see no need for a trust to be set up during their lifetime on an estate of this size. I would definitely suggest seeing a reputable Will Writer or a Solicitor who will advise them according to their estate, needs and what they are looking to achieve. At most, I would think they would need a 'property trust' (to protect inheritance of the family home) written into new Mirror Wills and to split the tenancy on their property (if not done so already so that they own 50% each), this would be set up as a Will Trust which only comes into force on 1st death and requires little or no maintenance until the 2nd death. (Depending on where you live this should cost no more than £600 at most).

The other important thing I stronly suggest is that they make Lasting Powers of Attorney so that each other and the people they choose as their attorneys can legally take care of their affairs (Health and Welfare and Property and Finance - one of each for both parents) if they are unable to do so for themselves either temporarily or permanently. It is impossible to get anyone to deal with you for anything these days if you are not the account holder due to Data Protection laws and without this express legal permission, it's a nightmare. If one passed away and the other needed to go into care, the attorneys could choose to rent the property to pay towards care costs and protect the home so that it can ultimately be inherited, without the Power of Attorney, this would be virtually impossible and cost a fortune. This should cost no more than around £2,000 (for all 4 including the court fees to register them) - but worth every penny if they are needed. (look up 'Heather Bateman story' and that will explain more) I hope that helps, good luck!

Save4ArainyDay wrote: »

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