getting round inheritance tax...?

[joko]

any one know how to get round this?

i thought perhaps if my dad wrote in the will, that everything goes to my wife under the proviso that she shares everything equally with the 3 children, within a time limit?

(there are issues with my mum, and my dad wants to make sure it goes to the 3 of us and not all to my dodgy brother, as she seems to want)

thanks

[gina32]

doesnt matter who it goes to if the tax is due, obviously depending on the amount left, then it has to be paid

[NORMANTHEDOG]

there really is no way round it,once the person has died and the estate is over the amount set out for it,but there are ways,before the person dies,he can give away money and possessions,but i believe he has to live for a certain amount of time as well,so its quite a complicated situation all round,get some legal advice

[Postdog]

it's seven years - I looked into it when I did that massive euro lottery jackpot some months back and I wanted to give my friends a mill each.

BTW, I needn't have bothered....

[Peter Pedant]

Um no, the above contestants have forgotten that IHT transfers on death to a spouse are free from IHT without limit

So then your mother can share it out and so long as she lives 7 years, its is all free !

raising questions like

why doesnt he do it, and then he can give what he likes to whom he likes - and nothing to the dodgy brother
But of course he has to live 7 years.

and he is gonna say - what do I live on ?

But think - that is also gonna be the same for your mother when she is widowed innit ?

OK wait for you mother to die - but then there is a truly huge IHT bill. - What he should have done is leave 285 000 to his children and the rest to the wife, who then passes on anther 285 000

and the rest is 40% tax.

Honestly what are you putting this on AB for ?

suppose your Dad is quite rich (�1m) - either way you looking at � 200 000 IHT at least and dja really think that you are gonna get good free IHT advice for nowt on AB.

Thimk ahead and go and see a solicitor specialising in IHT planning and wills. Costs about a thousand.

[buildersmate]

Its often possible to do it using a Nil Rate Band Discretionary Trust. This is what PP is referring to above. Doubt that you can DIY - but it shouldn't cost a grand either. Money for old rope - but its too risky to DIY.

[dzug]

What you are proposing will not avoid IHT - and may well increase it.

He cannot leave everything to his wife 'under the proviso'. It's a legal impossibility.

He can leave it without condition (in which case no IHT is payable under the spousal exemption) OR he can leave it to a trust with her (and maybe others) as trustees and beneficiaries. In which case no spousal exemption as the trust is the beneficiary, not (directly) her. There will be the standard �285K nil rate band.

If he writes the will as you propose he will be setting up an implicit trust with no specific trustees, no defined investment powers or objectives, etc - a legal minefield.

If he does want to set up a trust he should do so explicitly - see a solicitor specialising in such matters. Otherwise he should give you your inheritances directly in the will or accept that he cannot dictate what his widow does with what will be her money.

[blade']

If your parents brought a property abroad for the family to use this would be free of IHT.

[dzug]

I don't see why it would be free of IHT, blade.

In fact there could be double IHT - both here and in the country where it is located

[blade']

we have had advise and have a property in spain which is not liable for IHT.

[Barmaid]

Please GET PROFESSIONAL ADVICE. Since the implementation of the Finance Act 2006, it has become ever more difficult to mitigate an IHT bill on death. Discretionary trusts used to be one way but now such trusts can and do attract IHT. There are ways of achieving savings but professional advice is needed depending on the assets involved and family circumstances. Although it is possible to alter testamentary provisions after death which are effective for taxation purposes (s142 IHTA 1984), it is best to sort out affairs before this, since a post death variation has certain limitations. As PP and dzug say, get professional advice.

[Kat213]

His best bet really is to dispose of assets (money/property) before he dies, to whomever he wants, but as has already been stated he needs to live for seven years after he has disposed of the property. If he dies within seven years of transferring any property tax will still be payable but not at the ful rate. It is assessed on a 'sliding scale' depending on the number of years lived after the transfer.

[Barmaid]

The only problem with that is, very often the largest single asset is the family home. It is not possible to give that away and still live in it, since that will fall foul of the gifts with reservation of benefit rules or the pre owned assets tax rules.

[gina32]

its not just property and money that are liable to iht, goods that are in the home of any value, are valued also and go towards the make up of the amount left

[gina32]

if it was possible "to get round" dont you think everyone would be doing it and then thier wouldnt be any reason for IHT

[Barmaid]

trust me, in certain circumstances, it is entirely possible to mitigate IHT (spent a very very long time doing it). However, detailed advice is required.

[joko]

thanks everyone for your advice

barmaid - is there as site i can peruse, or should we just start with a solicitor? or citizens advice bureau?