Inheritance Tax Planning

A question about : Inheritance Tax Planning

To read the article this relates: Inheritance Tax

To discuss it or ask a question just click reply.

Best answers:

• It's a very important subject you're right. I hope people take note.
  One quick point though - if anyone wants to take issues on Paul's point ;D : about boots toe seperators please don't do it here - take it to the Discussion thread.
  Martin
• Hi,
  My Father has recently passed away :'( and has left his entire estate to my mum. Together this is worth about Ј500,000. I have just completed Probate, but have been told that I should look to do a deed of variation on my dads will, so the money he has passed can be put in trust, to avoid the IHT when my Mum passes. Is this easy to setup by myself, or should I really use expert advice?
  Regards
  Neil
• For us, this is an important topic. Really don't want to have to give the Tax Man any more than we will already have done. Still don't understand enough about it, so any comments or tips which appear on this board will be viewed with great interest.
  Many thanks.
  Mo
• Is it correct that, if IHT is due, the estimated amount must be paid BEFORE Probate is obtained when you can then liquidate the assets? It seems like a checken and egg situation.
  If it is correct, must the executor obtain a loan to pay this amount? I have been named the executor in my mother's will, and as the expected inheritance tax is going to be around Ј80,000 I am worried.
• I dont really understand how it works....but I read somewhere that the best way is to leave everything in a trust fund.
• Excellent topic
  I will view any comments with great interest as the official guides available are a mine field of information.
  eg: 'How to Pay Zero Inheritance Tax' contains 8 chapters and 56 pages of solicitor written language.
  If you are likely to be involved in signifcant IHT amounts then you should start protecting your heirs from the taxman now and the most important step is to organise your will.
  Also you may require a life insurance policy and the younger you are the cheaper the policies.
  Best advice is go see a Tax Planning professional.
• If you give money away before you die, it is still usually counted as part of your estate and eligibel for inheritance tax if you die within seven years of giving the gift. Therefore one golden rule is try and survive more than seven years - which means early planning of how to pass on your assets is important.
  
  If my Mother gives me Ј10,000. and then dies 1 year before the 7 year limit, how will they know that she gave me Ј10,000 6 years earlier in order to count it as part of her estate?
• There isn't an easy way for them to know (although if they investegated they could look at bank accounts).
  You will have to make declarations and sign forms.
  If you aren't honest then it's an offence, either fraud or tax evasion.
  It's quite a serious offence.
  Unless you get Ј10,000 in notes and put it under the mattress then there will be a paper trail through the banks which theorectically they could find if they looked.
  Under normal circumstances they won't go to these lengths but I wouldn't advise you to take the chance.
• Interesting,
  Look at it another way, lets say you needed a new car and it costs Ј10,000. Your mum buys the car and registers it in her name, then lets you insure and drive it!
  Is this traceable as a gift?
  Yorkieds
• If she paid for it with a cheque then it's traceable.
  If she got Ј10,000 worth of notes from under the mattress then it would be harder but they can still get the previous owner from the DVLA.
  If that previous owner was a car delaer then they would be expected to keep records for at least six years (they would needs these for all sort of other reasons like VAT).
  A private seller would not be expected to provide proof.
• BTW - I'm not interested in helping people evade paying tax (although avoidance is OK).
  So I won't be answering too many questions along these lines.
  I really don't advise tax evasion even if "they might never find out".
• It is possible for many couples to save Inheritance Tax (legally) without giving away assets they might need to live on later on.
  I am not here to advertise, but do be wary of taking advice from will writers and other types who advertise in the small print of the press. You will very often find that they work out much more expensive ( )than a normal solicitor or accountant (but do be sure that your tax adviser is a specialist as these trusts - though effective - are complex)
  End of sermon!
• Neil
  A deed of variation broadly entails the re-writing of your late father's will to incorporate a gift to you of the maximum amount, at the time your father died, that can be given away tax free (currently Ј263,000, last tax year Ј255,000 etc.)
  It needs to be signed within 2 years of the date of death by anyone who is prejudiced (financially) by the re-writing of the will - in this case your mother (as she will receive less as a result of the proposed gift to you.) If more tax is payable as a result of the variation then the executors of the will also need to sign.
  For inheritance and capital gains tax purposes it will be treated as a gift from your late father, rather than your mother - so no problem with the 7 year rule etc.
  Exactly the same applies if someone dies without a will.
• My parents were advised to take out some kind of insurance policy that would mean us paying less IHT. Myself and two siblings now split the premium between us as we will benefit. Is this a good thing?
• Thanks Martin for the helpful article. I have an elderly Mum who's got a bit of money in the bank and whose house is in the North and not worth a great deal. I reckon the lot is safely within the Ј263,000 limit. Our old car has just gone bang and Mum would like to buy us a new one to help out but is terrified that the tax-man will clobber us for it. We've told her it doesn't matter because her estate is not worth a lot..in fact we've told her she can write us a cheque for everything she has in her bank account and it still won't affect our tax position OR the inheritance tax UNLESS the value of her house eventually pushes her/us above the threshold. I'm sure that your article confirms this but if you could just say so here so that we can show her it might save her a lot of worry. She's also worried that if she has to go into a Nursing home they'll come looking to us for the money if she's already bought us a car!
  Thanks for your help and keep up the good work.
  Shirley M
• My wife and I own a property worth about 400K . We also own an apartment in Spain worth about 100k. Will IHT efect the Spanish property.???
  I also have outline planing to build a house in my garden how will I reduce my capital gains?????