Fans wills

[Little_Al]

So, basically, I can't do this myself. Is the best bet just to forget it and make sure that whatever we leave is under the Inheritance Tax threshold?

 

Is IT calculated on the estate or the amount left to each individual?

 

IT is calculated on the estate. Consider setting up a trust fund for your children which I have done when faced with this problem but before you do anything take proper legal or financial advice.

[onestepatatime]

IT is calculated on the estate. Consider setting up a trust fund for your children which I have done when faced with this problem but before you do anything take proper legal or financial advice.

 

But make sure it's not from Bratty and Co!

[Animal]

So, basically, I can't do this myself. Is the best bet just to forget it and make sure that whatever we leave is under the Inheritance Tax threshold?

 

Is IT calculated on the estate or the amount left to each individual?

 

Yeah the estate..

 

Not to delve heavily into anyone's financial affairs on a public forum but remember (with the spouses IHT limit) you've prob got £650,000 to play with before you need to concern yourself.

 

If you've got more than that then it may be worth speaking to someone...

[Trentham Lakes Valiant]

Yeah the estate..

 

Not to delve heavily into anyone's financial affairs on a public forum but remember (with the spouses IHT limit) you've prob got £650,000 to play with before you need to concern yourself.

 

If you've got more than that then it may be worth speaking to someone...

 

Might just squeak under £650,000 so should be ok. Thanks for the advice

[paultvale]

Can`t TLV just `sell` his house to his kids for say a quid and continue to live in it, for a penny a year rent? Not a gift then.

Although I`m sure if it was that simple everyone would be doing it.

[geosname]

Could it be avoided by staggering the inheritance?.. ie 100K per year for 10 years

Can it be avoided if the benefactor is not a UK resident?... the property is not in the UK?

[Caz or caz123]

Can`t TLV just `sell` his house to his kids for say a quid and continue to live in it, for a penny a year rent? Not a gift then.

Although I`m sure if it was that simple everyone would be doing it.

 

Nope. We wanted to make sure our lads get the house when we 'go' but a lot of the loopholes that once existed have been made secure by whoever does that sort of stuff.

 

We're slowly watching my step mums money raised from the sale of her house going down the plug hole. She's paying about 3K a month for her care in a residential home. Ok, that might not seem a lot but it's not exactly 5 star place! It's where she wanted to go though. Whilst that doesn't bother me one bit , it does her. She expected to be able to 'treat us ' all when she passes away but doubt there will be anything left for her to do that and it upsets her. She's 96 soon and it's a shame she has to be so upset by this. Heaven knows what it'll cost if she ever has to go into a 'care home' rather than a residential care home. She gets very angry because most of the folk in there pay nothing because they didn't own their own home.

[andy jones]

Back on topic this is an area where heritage railways benefit big time. It's essential the SC forms itself to be able to receive the donations via gift aid and the amount donated is added to by a payment of the income tax paid on that money. This applies to donations not sure about donations upon death.

[Trentham Lakes Valiant]

Nope. We wanted to make sure our lads get the house when we 'go' but a lot of the loopholes that once existed have been made secure by whoever does that sort of stuff.

 

We're slowly watching my step mums money raised from the sale of her house going down the plug hole. She's paying about 3K a month for her care in a residential home. Ok, that might not seem a lot but it's not exactly 5 star place! It's where she wanted to go though. Whilst that doesn't bother me one bit , it does her. She expected to be able to 'treat us ' all when she passes away but doubt there will be anything left for her to do that and it upsets her. She's 96 soon and it's a shame she has to be so upset by this. Heaven knows what it'll cost if she ever has to go into a 'care home' rather than a residential care home. She gets very angry because most of the folk in there pay nothing because they didn't own their own home.

 

That's exactly what I want to avoid Caz

[Animal]

Can`t TLV just `sell` his house to his kids for say a quid and continue to live in it, for a penny a year rent? Not a gift then.

Although I`m sure if it was that simple everyone would be doing it.

 

As caz mentioned...no...the transaction is deemed to be at Market value unfortunately...irrespective of what is actually paid.

[Animal]

Could it be avoided by staggering the inheritance?.. ie 100K per year for 10 years

Can it be avoided if the benefactor is not a UK resident?... the property is not in the UK?

 

It's more to do with domicile as opposed to residence to be honest.

 

If you are deemed to be domiciled in the uk tax is due on world wide assets

[Animal]

Back on topic this is an area where heritage railways benefit big time. It's essential the SC forms itself to be able to receive the donations via gift aid and the amount donated is added to by a payment of the income tax paid on that money. This applies to donations not sure about donations upon death.

 

It would need to be an organisation with charitable status though

[andy jones]

I appreciate that and if the SC were to form as a Trust they would also have access to grant aid that the club can't.

[mattyboy]

Nope. We wanted to make sure our lads get the house when we 'go' but a lot of the loopholes that once existed have been made secure by whoever does that sort of stuff.

 

We're slowly watching my step mums money raised from the sale of her house going down the plug hole. She's paying about 3K a month for her care in a residential home. Ok, that might not seem a lot but it's not exactly 5 star place! It's where she wanted to go though. Whilst that doesn't bother me one bit , it does her. She expected to be able to 'treat us ' all when she passes away but doubt there will be anything left for her to do that and it upsets her. She's 96 soon and it's a shame she has to be so upset by this. Heaven knows what it'll cost if she ever has to go into a 'care home' rather than a residential care home. She gets very angry because most of the folk in there pay nothing because they didn't own their own home.

 

Most peoples homes are their principal asset and understandably they want to see this asset pass to the next generation and not eaten by care fees

 

Gifting your home to your kids looks a good option however should any of those children divorce or become bankrupt say then the asset of your home is suddenly an asset subject to divorce settlement or claimed by the Trustee in bankruptcy. You could also just fall out. Worth remembering also that capital gains tax is charged on the sale of property that is not your main residence meaning that after the cgt exemption tax at either 18 or 28pc would be due

 

It's fair that most comments on here about inheritance tax stating that the joint in most cases (married couples and those in civil partnership) will not have an estate exceeding the 650k are correct however the care fees issue is still a problem - and a very different problem

 

The first and simplest solution might by to construct your will to create a trust to receive half the property on first death (so you need to plan when both couples are still alive - too many people ask fir my help when they are already widowed) - you must also change the ownership of the property to tenants in common as most are owned as joint tenants meaning they pass to the survivor and buy pass any will. The will will afford life intererst to the spouse until they die, when the whole property will pass to the kids.

 

This works because the kids don't own the property so they can't affect it by becoming bankrupt or divorcing.

 

The property is protected for care fees because the Charging for Residential Care guidelines explicitly state that a part ownership of a property should be valued at nil - you can't sell half a house

 

The only times this would not work is where both of the couple require care at the same time - rather than one at a time - this is rare but can happen, normally there is an independent spouse at home still or it occurs when they are already widows

 

There are other benefits - second marriages nullify a will - that's the law meaning that often the second to die dies intestate and the new spouse who has not been around long inherits under the law of intestacy - not what anyone intended or anticipated but as a result the kids can be completely disinherited - think Last Tango in Halifax - they need a new will and until they do the kids won't inherit, If when you die your half if the home is already passed in trust to the kids nothing in the future can change that so it protects your wishes from your surviving spouse changing them.

 

It's not a deliberate deprivation of assets to the local authority as it's sensible practice for the reasons above to protect your bloodline - and we all have by statute in the uk something called testamentary freedom - we can give our assets to whoever we like when we die (subject to the inheritance act 1925 which protects certain parties)

 

Sorry to hijack an interesting thread but there you go - I do this stuff for a living

 

Matt Bentley BA Hons Dip PFS

Independent Financisl Adviser and Associate of the Institute of Professional Willwriters

[Animal]

Most peoples homes are their principal asset and understandably they want to see this asset pass to the next generation and not eaten by care fees

 

Gifting your home to your kids looks a good option however should any of those children divorce or become bankrupt say then the asset of your home is suddenly an asset subject to divorce settlement or claimed by the Trustee in bankruptcy. You could also just fall out. Worth remembering also that capital gains tax is charged on the sale of property that is not your main residence meaning that after the cgt exemption tax at either 18 or 28pc would be due

 

It's fair that most comments on here about inheritance tax stating that the joint in most cases (married couples and those in civil partnership) will not have an estate exceeding the 650k are correct however the care fees issue is still a problem - and a very different problem

 

The first and simplest solution might by to construct your will to create a trust to receive half the property on first death (so you need to plan when both couples are still alive - too many people ask fir my help when they are already widowed) - you must also change the ownership of the property to tenants in common as most are owned as joint tenants meaning they pass to the survivor and buy pass any will. The will will afford life intererst to the spouse until they die, when the whole property will pass to the kids.

 

This works because the kids don't own the property so they can't affect it by becoming bankrupt or divorcing.

 

The property is protected for care fees because the Charging for Residential Care guidelines explicitly state that a part ownership of a property should be valued at nil - you can't sell half a house

 

The only times this would not work is where both of the couple require care at the same time - rather than one at a time - this is rare but can happen, normally there is an independent spouse at home still or it occurs when they are already widows

 

There are other benefits - second marriages nullify a will - that's the law meaning that often the second to die dies intestate and the new spouse who has not been around long inherits under the law of intestacy - not what anyone intended or anticipated but as a result the kids can be completely disinherited - think Last Tango in Halifax - they need a new will and until they do the kids won't inherit, If when you die your half if the home is already passed in trust to the kids nothing in the future can change that so it protects your wishes from your surviving spouse changing them.

 

It's not a deliberate deprivation of assets to the local authority as it's sensible practice for the reasons above to protect your bloodline - and we all have by statute in the uk something called testamentary freedom - we can give our assets to whoever we like when we die (subject to the inheritance act 1925 which protects certain parties)

 

Sorry to hijack an interesting thread but there you go - I do this stuff for a living

 

Matt Bentley BA Hons Dip PFS

Independent Financisl Adviser and Associate of the Institute of Professional Willwriters

 

All good advice and I wouldn't disagree with any of it...

 

However, there can be complications and technicalities that anyone entering into this kind of succession planning should be aware.

 

This sort of advice is isn't cheap and although the future benefits may make it worthwhile, the client should always be familiar with the set up and running costs of such a plan.

 

Although your comment about deliberate deprivation of assets is correct if you carry out this planning at a later stage of life this rule cannot be relied upon and should be given with a caveat . The last 12 months have seen local authorities scrutinise this in more detail.

 

Also from a less technical perspective, even if an asset protection plan worked, and a care home resident did manage to secure a local-authority funded place, the resident would end up with potentially less choice about where to go.

 

People just need to make sure that planning is robust and done early...and they use a good IFA/Accountant...which I'm sure you are! :):)