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    • Keep pedalling
    • By Keep pedalling 18th Nov 17, 5:34 PM
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    Keep pedalling
    Unless this large sum is over his nill rate band (325k) there will be no tax implication on you if he leaves the rest of his estate to you. It will simply reduce the nil rate band you estate can transfer from him. If you have more money than you need, gifting in your lifetime is not only good for IHT it gives a a chance to see it put to good use, something dead people never get to appreciate.

    He could also cover any IHT tax bill associated with gifts with term insurance.
    • SallySunshine
    • By SallySunshine 18th Nov 17, 5:52 PM
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    SallySunshine
    Yes thanks, i do know that it would reduce the nil tax band transfer.
    It wasn't really a surprise to me and we had talked about this before, it would not impact on our life really.
    If we did this would it be better coming from us jointly, what impact would that have on things in the way of nil band reduction on each of us.
    I'm just in the process of tying up some maturing bonds in the next couple of weeks, so that's why i'm asking him to look at things.
    Also joint mortgage with her partner, so that needs to be thought through, don't want to cause any problems there.
    • Keep pedalling
    • By Keep pedalling 18th Nov 17, 5:57 PM
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    Keep pedalling
    Yes thanks, i do know that it would reduce the nil tax band transfer.
    It wasn't really a surprise to me and we had talked about this before, it would not impact on our life really.
    If we did this would it be better coming from us jointly, what impact would that have on things in the way of nil band reduction on each of us.
    I'm just in the process of tying up some maturing bonds in the next couple of weeks, so that's why i'm asking him to look at things.
    Also joint mortgage with her partner, so that needs to be thought through, don't want to cause any problems there.
    Originally posted by SallySunshine
    We have done similar with our children, and have always done it as joint gifts. We have let the children worry about handling this with their other halves, who they are now both married to.
    • getmore4less
    • By getmore4less 18th Nov 17, 8:42 PM
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    getmore4less
    Just made new wills out and quite happy with result apart from minor tweaks.
    One remark from a question to the solicitor has made my O.H. decide to give our daughter a very large sum of money, as he was told if he died within 7 years any IHT due from that gift would be taken out of the remaining estate, so no worries.
    This is all because we are both over the IHT threshold at the moment.

    I am rather perturbed as I'm sure he doesn't realise other perhaps future implications of this gift and am having rather a struggle to get him to understand without seeming selfish.
    Originally posted by SallySunshine
    I may have read it wrong or misunderstood

    I would be concenred if the solicitor was suggesting there would be IHT from the gift.
    • SallySunshine
    • By SallySunshine 18th Nov 17, 11:47 PM
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    SallySunshine
    No, he did make it clear about that, also the 7 year ruling re large gifts etc.
    Although not enamoured that he had the local finance planner send an info pack.
    Guess who?
    Yep, St James Place.
    How ironic since I'd been reading lots of posts on here.
    • LIZZIE1999
    • By LIZZIE1999 4th Mar 18, 2:43 PM
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    LIZZIE1999
    Estate planning
    So I'm a new I to this site, so please be gentle with me...
    Elderly mum has property worth ~1m. Substantial pension, (100k), and isas and shares (200k), how best to spend/arrange to help avoid some iht? Please. She lives at home. No substantial costs at the moment.
    • Keep pedalling
    • By Keep pedalling 4th Mar 18, 2:48 PM
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    Keep pedalling
    So I'm a new I to this site, so please be gentle with me...
    Elderly mum has property worth ~1m. Substantial pension, (100k), and isas and shares (200k), how best to spend/arrange to help avoid some iht? Please. She lives at home. No substantial costs at the moment.
    Originally posted by LIZZIE1999
    Is she a widow, and if so did her husband leave everything to her.
    • 00ec25
    • By 00ec25 4th Mar 18, 3:18 PM
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    00ec25
    So I'm a new I to this site, so please be gentle with me...
    Elderly mum has property worth ~1m. Substantial pension, (100k), and isas and shares (200k), how best to spend/arrange to help avoid some iht? Please. She lives at home. No substantial costs at the moment.
    Originally posted by LIZZIE1999
    she can afford to pay for professional advice...
    • Arthurian
    • By Arthurian 4th Mar 18, 3:46 PM
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    Arthurian
    If she is a widow and her husband left everything to her, there is no IHT to pay on 325,000 (her nil rate tax band) + 325,000(her husband's nil rate) = 650,000 plus 100,000 of the house value. If husband left half to her and half to the children, there is no IHT to pay on 325,000 + 162,500 plus 100,000 of the house value. The best way to mitigate IHT is to give some to children and hope to live a further 7 years. I think you can buy insurance against the possibility of IHT liability on that should she die before the 7 years is up.
    • Savvy_Sue
    • By Savvy_Sue 4th Mar 18, 3:54 PM
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    Savvy_Sue
    If she is a widow and her husband left everything to her, there is no IHT to pay on 325,000 (her nil rate tax band) + 325,000(her husband's nil rate) = 650,000 plus 100,000 of the house value. If husband left half to her and half to the children, there is no IHT to pay on 325,000 + 162,500 plus 100,000 of the house value. The best way to mitigate IHT is to give some to children and hope to live a further 7 years. I think you can buy insurance against the possibility of IHT liability on that should she die before the 7 years is up.
    Originally posted by Arthurian
    BUT she still needs professional advice, and anyone suggesting that she can shelter some of her assets in a trust to avoid paying for care / care home fees (should they be necessary) is to be avoided like the plague.
    Still knitting!
    Completed: 1 adult cardigan, 3 baby jumpers, 3 shawls, 1 sweat band, 3 pairs baby bootees,
    1 Wise Man Knitivity figure + 1 sheep, 2 pairs socks, 2 hats 2 balaclavas for seamen, 1 balaclava for myself ...
    Current projects: Poppies, mohair cardigan pattern arrived and going strong!
    • infinity87
    • By infinity87 6th Mar 18, 8:35 PM
    • 2 Posts
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    infinity87
    IHT on 1M
    Good evening folks.

    Sadly, my father has just passed away. He's left his estate to my Mum, the house and business were run as one in joint ownership, so as far as I'm aware, my mother owes nothing in IHT. But she is very keen to sell the house/business and offload a lot to me and my brother to invest and enjoy, life we have learnt, is short and often cruel, and we have lost the most important person in our lives already at the ages of 27 & 30

    The estate that now belongs to her has yet to be valued, but we estimate in total, once sold she will have somewhere between 1M and 1.2M. She doesn't want to give it all away, obviously she needs another house to live in, and enough money to live off too, but obviously we are concerned about IHT on such a large sum if she were to give me and my brother a few hundred thousand each.

    Any advice? Are we both safe up to the 325,000 threshold? Any advice much appreciated
    • Savvy_Sue
    • By Savvy_Sue 6th Mar 18, 9:48 PM
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    Savvy_Sue
    I am sorry for your loss.

    With an estate that size, your mother needs professional advice to reduce the IHT liability on her eventual death, but this probably isn't the most urgent thing on her 'to do' list. More urgently, she probably needs to be speaking to the accountant to discuss the sale of the business, and any tax liabilities from that.

    One thing which may be worth considering is a Deed of Variation, which she can make within two years. This would enable her to give some of her inheritance to each of you in a way which has the effect of bypassing her estate - it's as if your Dad gave the money to you not her. That way her estate will be slightly smaller.

    However, if your mum is likely to survive for 7 years then it's a non-issue anyway. I know one can never know, but gifts of any size given during her lifetime have no tax due, except that if she dies within 7 years they are counted within her estate for IHT purposes.

    Whatever you do, make sure she keeps enough to enjoy a good standard of living for a long way into the future, especially if she has any health issues which might make independent living difficult in future. Avoid like the plague anyone who suggests setting up complex trusts to shelter her assets from assessment for paying for care, should it ever be needed.
    Still knitting!
    Completed: 1 adult cardigan, 3 baby jumpers, 3 shawls, 1 sweat band, 3 pairs baby bootees,
    1 Wise Man Knitivity figure + 1 sheep, 2 pairs socks, 2 hats 2 balaclavas for seamen, 1 balaclava for myself ...
    Current projects: Poppies, mohair cardigan pattern arrived and going strong!
    • getmore4less
    • By getmore4less 6th Mar 18, 10:04 PM
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    getmore4less
    DOV can cause more tax as they use up transferable nil rate band.
    • Savvy_Sue
    • By Savvy_Sue 6th Mar 18, 10:21 PM
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    Savvy_Sue
    DOV can cause more tax as they use up transferable nil rate band.
    Originally posted by getmore4less
    Well there you are, that's why you need proper advice, isn't it?
    Still knitting!
    Completed: 1 adult cardigan, 3 baby jumpers, 3 shawls, 1 sweat band, 3 pairs baby bootees,
    1 Wise Man Knitivity figure + 1 sheep, 2 pairs socks, 2 hats 2 balaclavas for seamen, 1 balaclava for myself ...
    Current projects: Poppies, mohair cardigan pattern arrived and going strong!
    • infinity87
    • By infinity87 7th Mar 18, 10:14 AM
    • 2 Posts
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    infinity87
    Thanks very much for the tips. I like to assume my mum will live a long time yet, she's a healthy 65 year old, but then we assumed that with my father also, you just don't know what's around the corner.

    So she is able to offer me and my brother large sums of money as gifts, and there's no tax issues so long as she lives 7+ years? We're obviously trying to do everything legally and above board, however we're also trying to protect the capital my Dad has worked his entire life for.
    • Keep pedalling
    • By Keep pedalling 7th Mar 18, 4:36 PM
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    • 5,550 Thanks
    Keep pedalling
    Thanks very much for the tips. I like to assume my mum will live a long time yet, she's a healthy 65 year old, but then we assumed that with my father also, you just don't know what's around the corner.

    So she is able to offer me and my brother large sums of money as gifts, and there's no tax issues so long as she lives 7+ years? We're obviously trying to do everything legally and above board, however we're also trying to protect the capital my Dad has worked his entire life for.
    Originally posted by infinity87
    Your mother only needs to live April 2021 to be able to leave 1M tax free, through the use of both parents nil rate and main residence nil rate bands, but in you first post you talk about their home being owned as part of the business, which may prevent the main residence nil rate band being claimed. She definitely needs professional advice.
    • St-George
    • By St-George 12th Apr 18, 5:46 PM
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    St-George
    I have bought two properties for the sole purpose of giving them to my Grandchildren. I am quite happy to do this now or upon my death, but I would like for them not to have to pay any tax on the receipt of these. I would be quite happy put them into a trust with immediate effect ? The properties are currently rented out but I do not need the income so I am OK with it being used for their benefit. Their present ages are ten and seven and I am seventy eight but have good stats and am fairly hopeful of being around when the youngest is eighteen.
    Is this something that I can get forms from the inland revenue and fill out myself or do I need to consult a professional, if so, how will I know if he is competent.
    Cheers,
    St-George
    • Savvy_Sue
    • By Savvy_Sue 13th Apr 18, 12:15 AM
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    Savvy_Sue
    I think you need a professional, quite possibly more than one: wills, trusts, general financial planning ... How you know if they're competent or not is a potential problem, but there are several things to think about ...

    In no particular order: no-one under 18 can own property in their own right, so a trust would be needed for that, or if you hang on to them for now one would have to be formed on your death if either had not yet reached adulthood. You'd need to select your trustees carefully in either event, they need to be able to manage the properties / make informed financial decisions etc etc etc. Professional trustees will obviously charge for their services.

    Do you care if it's fair, if one property ends up worth more than the other?

    What if you have more grandchildren?

    What if either of them pre-deceases you?

    They wouldn't have to pay tax on receipt, but your estate may be liable for inheritance tax.

    They might well have to pay capital gains tax if / when they decide to sell, based on any increase in value from the date they acquired the property to the date they sell it.

    You and any trustees (either now or later) need to be very on top of all the ramifications of being a landlord.

    Deprivation of assets. Unless you have very deep pockets and are certain you won't ever need residential care, hang onto enough assets to pay for the best, because if you run out, your local authority may decide that you gave these assets away in order to avoid funding your own care. I'm not saying that's your intention, but do your sums carefully.
    Still knitting!
    Completed: 1 adult cardigan, 3 baby jumpers, 3 shawls, 1 sweat band, 3 pairs baby bootees,
    1 Wise Man Knitivity figure + 1 sheep, 2 pairs socks, 2 hats 2 balaclavas for seamen, 1 balaclava for myself ...
    Current projects: Poppies, mohair cardigan pattern arrived and going strong!
    • getmore4less
    • By getmore4less 15th Apr 18, 6:04 AM
    • 32,035 Posts
    • 19,222 Thanks
    getmore4less
    I have bought two properties for the sole purpose of giving them to my Grandchildren. I am quite happy to do this now or upon my death, but I would like for them not to have to pay any tax on the receipt of these. I would be quite happy put them into a trust with immediate effect ? The properties are currently rented out but I do not need the income so I am OK with it being used for their benefit. Their present ages are ten and seven and I am seventy eight but have good stats and am fairly hopeful of being around when the youngest is eighteen.
    Is this something that I can get forms from the inland revenue and fill out myself or do I need to consult a professional, if so, how will I know if he is competent.
    Cheers,
    St-George
    Originally posted by St-George
    Might have been a good idea to have taken the advice BEFORE buying the each of the grandchildren a letting business.


    The income tax situation for letting business are not straightforward, sticking the business in a trust for minors will have added complications not just with the income but CGT and IHT.
    • Keep pedalling
    • By Keep pedalling 15th Apr 18, 9:50 AM
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    Keep pedalling
    If you have held these properties for a few years you may have a capital gains liability yourself if you transfer the properties into a trust. You should have taken professional advice before jumping into property as it is very unlikely to be the best solution to what you are trying to achieve, and you definitely need to take it now.
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