Inheritance Tax

[Maggoty]

A work colleage has a query re IHT.

Her father in law and mother in law became very ill, too ill to live on their own. They sold their house (for one million) and moved in with one of the daughters. The money is sitting in a bank account and as well as that they have stocks and shares.

They have both been told that neither of them is expected to last longer than 18 months. So they decided to split the money between the offspring.

Obviously they are coming up against probs in doing this. Is there a way of dividing the money up between their kids without them being heavily taxed on as and when they die. They are getting quite stressed about it as they want to provide for the kids and grandkids.

Thank you in advance

[R1Geezer]

doesn't matter how they split it, the tax is on the estate not the recipients. if they've got 18 months I'd say book themselves on a luxury cruise for 18 months and pi55 the lot up. far better than leaving to money grubbing kids to pi55 it up themselves.

[Maggoty]

I know that was a tongue in cheek answer geezer but the point is that they WANT to leave it to the kids and they are far too ill to go and enjoy themselves. Such a pity. The daughter is their carer at the mo.

x

[BIG BIG JOHN]

Organise a game of Poker. The in-laws will play for very high stakes and unfortunately will lose heavily (suprise?)

The daughters hwever, will have a winning streak and scoop the lot.

[themas]

These answers are insensitive and stupid when a serious question has been asked.

The total tax free amount for IHT - for the two of them - is �624000. All the rest will be taxed at 40%. It is best not to distribute all the money to the children because if there is nothing left in the estate the tax will still have to be paid, & the children who have received the money will have to pay it.

BUT there are various somewhat complex schemes involving trusts which just might reduce the tax burden. If they want to explore this possibility they will have to consult a specialist solicitor - one who is a member of the Society of Trust & Estate Practitioners (see their website).

[dasherman]

I'm no expert here so here's a couple of links for you:-

http://www.avoidinginheritancetax.com/

http://www.iii.co.uk/articles/articledisplay.j sp?section=Tax&article_id=4965705

The best advice I can give you is go and see a specialist solicitor.

[Skyline D]

"These answers are insensitive and stupid when a serious question has been asked"

I appreciate that a serious question has been asked but seriously, with one million quid involved and a quite clear significant inheritance tax planning issue an advice website is not really where serious answers should be sought.

The best answer ANYONE could give is to go see a good accountant or a solictitor about it. The likelihood is there are ways that Trust Funds could be set up to alleviate the tax burden but such advice is waaay too complicated for a quick website post.

They need professional advice and they need to move on it quickly.

[Maggoty]

Thank you all for your answers. They did seek advice from various IFA's but I thought this would be another good avenue to go down.

Time is the main problem here. But you have been of help with some really good links and websites

Thank you one and all

xx

[themas]

Maggoty

IFAs are not the right people to give the proper advice on this - - you really do need an experienced STEP solicitor, as I suggested before.

[Barmaid]

Only just seen this, but gotta agree with Themas. Your friend really needs at STEP member or equivalent to advice. You standard IFA will not have the trust law knowledge to be able to point in the right direction.

[Barmaid]

Of course, I meant "advise". Too much grape juice.

[Maggoty]

Thank you Themas and Barmaid. I will advise her to take the next STEP (see what I did there!!)

xx