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  • FIRST POST
    • chrisjoanne
    • By chrisjoanne 4th Mar 18, 5:02 PM
    • 143Posts
    • 60Thanks
    chrisjoanne
    Friend has 70k to invest - Advice please.
    • #1
    • 4th Mar 18, 5:02 PM
    Friend has 70k to invest - Advice please. 4th Mar 18 at 5:02 PM
    Hi


    I'm looking for a little bit of advice please.


    A friend has around 70k to invest from a recent property sale.


    She is widowed at over 70 years of age with 2 adult daughters and 3 grandchildren.


    She already has 30k invested in Premium Bonds and would like to invest a further 20k to max this out.


    She would like to give both daughters around 25k each to be placed into Premium Bonds. Is this advisable?


    I read somewhere that a "gift" of only 3k can only be made per year. If she decided to give her daughters the full 25k each what are the (tax) implications?


    I understand an ISA maybe be advisable from some users or to split the funds into different bank accounts. Also Government bonds has been spoken about.



    The present value of the property she lives in is around 105k so total assets are approx 240k - receives a liveable pension with small savings per month made on this.


    Thank you in advance
Page 1
    • kidmugsy
    • By kidmugsy 4th Mar 18, 5:13 PM
    • 10,560 Posts
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    kidmugsy
    • #2
    • 4th Mar 18, 5:13 PM
    • #2
    • 4th Mar 18, 5:13 PM
    She can gift what she jolly well likes: the 3k figure is just the amount that will automatically be exempt from Inheritance Tax when she dies. There is no gift tax in Britain. And her estate is so small that questions of Inheritance Tax will not arise anyway.


    The worry for the future might be what's called the Deprivation of Assets rule, whereby if she needed taxpayer subsidy - e.g. for a care home - her wealth would be assessed as if the gifted money were still hers. This (apparently) is not a worry if she is currently in good health.

    I suggest you use your browser to find out more about it, or wait until someone more expert than me comes along to this thread.
    Free the dunston one next time too.
    • chrisjoanne
    • By chrisjoanne 4th Mar 18, 5:39 PM
    • 143 Posts
    • 60 Thanks
    chrisjoanne
    • #3
    • 4th Mar 18, 5:39 PM
    • #3
    • 4th Mar 18, 5:39 PM
    Thank you so much for your quick reply. I've never had the need to look into this as I've never had money :-) but will certainly have a little look around the forum for other user threads and other sites which may help too.
    Thanks
    • Alexland
    • By Alexland 4th Mar 18, 5:56 PM
    • 2,389 Posts
    • 1,790 Thanks
    Alexland
    • #4
    • 4th Mar 18, 5:56 PM
    • #4
    • 4th Mar 18, 5:56 PM
    Although premium bonds are very safe their spending power will get eroded by inflation over time. Without understanding how the daughters would use the money it is hard to comment on if premium bonds would be appropriate for their needs.
    • zilla6
    • By zilla6 4th Mar 18, 8:10 PM
    • 21 Posts
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    zilla6
    • #5
    • 4th Mar 18, 8:10 PM
    • #5
    • 4th Mar 18, 8:10 PM
    See this about gifts
    https://www.gov.uk/inheritance-tax/gifts
    • Audaxer
    • By Audaxer 4th Mar 18, 10:02 PM
    • 1,048 Posts
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    Audaxer
    • #6
    • 4th Mar 18, 10:02 PM
    • #6
    • 4th Mar 18, 10:02 PM
    Although premium bonds are very safe their spending power will get eroded by inflation over time. Without understanding how the daughters would use the money it is hard to comment on if premium bonds would be appropriate for their needs.
    Originally posted by Alexland
    Yes, putting it all in Premium Bonds will most probably 'earn' less in winnings than interest you would get in bank savings and current accounts.
    • chrisjoanne
    • By chrisjoanne 5th Mar 18, 9:47 AM
    • 143 Posts
    • 60 Thanks
    chrisjoanne
    • #7
    • 5th Mar 18, 9:47 AM
    • #7
    • 5th Mar 18, 9:47 AM
    Thank you again for your ideas.
    • Malthusian
    • By Malthusian 5th Mar 18, 10:22 AM
    • 4,110 Posts
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    Malthusian
    • #8
    • 5th Mar 18, 10:22 AM
    • #8
    • 5th Mar 18, 10:22 AM
    Originally posted by zilla6
    No, don't bother. "The present value of the property she lives in is around 105k so total assets are approx 240k" - Inheritance Tax is a non-issue.

    She would like to give both daughters around 25k each to be placed into Premium Bonds. Is this advisable?
    by chrisjoanne


    If she gives the money to her daughters the daughters will decide what to invest it in, if anything.

    There is no reason on earth she cannot give them 25k each. If the day after she made the gift she had to go immediately into care, she would still have assets worth 190k which would be used to pay for her care. The post suggests she lives modestly, and the average stay in a care home is two years (albeit there is a very long tail). The possibility of her exhausting the 190k on care is extremely remote.

    You have not even mentioned care fees, and it is not deliberate deprivation when someone gives 50k of surplus cash to their children when they do not anticipate needing care.

    If her daughters want to know what they should do with the money, they should be the ones asking on here. Taking advice from a friend of your mother's who has asked some random people down the pub isn't even second hand information, it's third hand.

    Your friend needs to understand that if she gives them 25k it is their money, and it does not matter if she wants them to invest it in Premium Bonds or anything else; it is their money and they may choose to invest it or blow the whole lot on a round the world cruise.

    Why does she want to give them money if she expects them to not spend it and just hold onto it in Premium Bonds? Inheritance Tax is a non-issue, so there's no need to give the money away before death to avoid a 40% penalty (subject to the 7 year rule). If she wanted to allow her daughters to reduce their mortgages or fund their children's (her grandchildren's) education or weddings then that would make sense. But from what you've said she wants to give her children money but then they're not supposed to do anything with it. Why not just hold onto it until her daughters have something to spend it on - or she does?
    • chrisjoanne
    • By chrisjoanne 5th Mar 18, 2:10 PM
    • 143 Posts
    • 60 Thanks
    chrisjoanne
    • #9
    • 5th Mar 18, 2:10 PM
    • #9
    • 5th Mar 18, 2:10 PM
    Excellent reply - Thank you.
    The person I've posted for has read my original post and replies. She wanted me to only inform users on here of the basic's. I believe inheritance tax may have been a concern but I have given her the links above.
    She was also concerned with getting information direct from a bank or a financial adviser as she believed she may only get one persons opinion. Asking on a forum may give her other ideas what to do and avenues to go down.
    It's a starting point - she's looking further into the ideas above.
    Thank you.
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