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    • Axel
    • By Axel 6th Jul 18, 11:10 AM
    • 141Posts
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    Axel
    Gifts Made During Seven Years Prior to Death
    • #1
    • 6th Jul 18, 11:10 AM
    Gifts Made During Seven Years Prior to Death 6th Jul 18 at 11:10 AM
    I am the Executor of my mother's will and have discovered that member of the family has been taking money from her account for years. It is with my Mother's full knowledge as she sees it as "helping out" and these will be classed as "gifts". Can add the value of these "gifts" to the estate then deduct an equal sum from the family member's share of the estate.

    Any advice would be appreciated.
Page 1
    • Linton
    • By Linton 6th Jul 18, 12:17 PM
    • 9,402 Posts
    • 9,540 Thanks
    Linton
    • #2
    • 6th Jul 18, 12:17 PM
    • #2
    • 6th Jul 18, 12:17 PM
    I am the Executor of my mother's will and have discovered that member of the family has been taking money from her account for years. It is with my Mother's full knowledge as she sees it as "helping out" and these will be classed as "gifts". Can add the value of these "gifts" to the estate then deduct an equal sum from the family member's share of the estate.

    Any advice would be appreciated.
    Originally posted by Axel
    You are confusing the estate for tax purposes and the estate for inheritances, they can be very different. For tax purposes you need to include the gifts. However for distribution against the will, the gifts are irrelevant as they happened prior to death. You have no authority to distribute the estate other than in accordance with the will. Things would br different if you had proof that the gifts were in fact loans, but in this case it would seem you do not.
    • Axel
    • By Axel 6th Jul 18, 1:52 PM
    • 141 Posts
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    Axel
    • #3
    • 6th Jul 18, 1:52 PM
    • #3
    • 6th Jul 18, 1:52 PM
    Yes, apologies for the confusion. The money is definitely not a loan, but is being taken as an advance against the inheritance. "It is coming to me anyway" was the statement made when challenged.

    Does this make any difference?

    Axel
    • Mojisola
    • By Mojisola 6th Jul 18, 1:57 PM
    • 29,478 Posts
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    Mojisola
    • #4
    • 6th Jul 18, 1:57 PM
    • #4
    • 6th Jul 18, 1:57 PM
    I am the Executor of my mother's will and have discovered that member of the family has been taking money from her account for years. It is with my Mother's full knowledge as she sees it as "helping out" and these will be classed as "gifts".
    Originally posted by Axel
    The money is definitely not a loan, but is being taken as an advance against the inheritance. "It is coming to me anyway" was the statement made when challenged.
    Originally posted by Axel
    If the recipient acknowledges the money was paid as an advance on their inheritance, it was a loan against the estate.

    An elderly relative has done this for one of his children but has kept clear records showing the amounts taken and that the inheritance should be reduced by that sum.
    • Rubik
    • By Rubik 6th Jul 18, 1:59 PM
    • 114 Posts
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    Rubik
    • #5
    • 6th Jul 18, 1:59 PM
    • #5
    • 6th Jul 18, 1:59 PM
    What does the Will say in respect of this loan being "an advance" against the inheritance?
    • Brynsam
    • By Brynsam 6th Jul 18, 2:45 PM
    • 1,272 Posts
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    Brynsam
    • #6
    • 6th Jul 18, 2:45 PM
    • #6
    • 6th Jul 18, 2:45 PM
    What does the Will say in respect of this loan being "an advance" against the inheritance?
    Originally posted by Rubik
    I'd put money on two things: the will being silent on the point; and there being no documentary evidence that these 'gifts' were an advance on the inheritance.

    If the recipient is prepared to sign something to confirm they acknowledge these were indeed 'advance payments' and can be taken off any bequest to them in the will, fine. Otherwise it's unlikely you could decide to treat them as such based on a conversation the recipient won't confirm in writing. Your use of the word 'challenge' makes me fairly certain what the outcome might be.
    • relaxtwotribes
    • By relaxtwotribes 10th Jul 18, 4:54 PM
    • 253 Posts
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    relaxtwotribes
    • #7
    • 10th Jul 18, 4:54 PM
    • #7
    • 10th Jul 18, 4:54 PM
    Well, you are the Executor and are in possession of the estate, so when it comes to the time for distribution why not make a deduction of the total 'advances' from that party's inheritance (without distributing it elsewhere)? See just what challenge is forthcoming and then take a view as to how robust you wish to be.
    • SeniorSam
    • By SeniorSam 10th Jul 18, 6:49 PM
    • 1,129 Posts
    • 563 Thanks
    SeniorSam
    • #8
    • 10th Jul 18, 6:49 PM
    • #8
    • 10th Jul 18, 6:49 PM
    If the gifts were in advance of expected inheritance and the value of the estate in not at a level where inheritance tax is payable (with the gifts included), then don't worry about it. If however the estate, with the gifts, will be into the inheritance taxation level, then unfortunately, those gifts will come under the seven year rule and need to be included in the estate value, possibly with some relief.

    There is no 'exemption' for taking an inheritance in part before the event. If that were so, then there would be little point in having inheritance tax rules.

    The Executors have a legal duty to disclose all gifts and bring them into the calculations if they were made in the last seven years before death. If Executors do not disclose all information, then they can be legally responsible and liable for the estate taxes if not paid from the estate.

    You would be well advised to seek legal help on this.
    I'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, so my comments are just meant to be helpful.
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