wills

[mockingbird]

Hi – an 83 year old woman is due to inherit £50,000 from her recently deceased sister. The beneficiary is on benefits. She does not want to inherit at the expense of he benefits; she wants her only son to inherit the £50,000 instead. I was asked my opinion on this scenario recently but I do not know enough law to respond. It would appear they are attempting to bypass the fundamental issues of inheritance and the many taxes which might apply. What would happen should she refuse the inheritance? There are three further beneficiaries. Thank you

[Barmaid]

In this case it is unlikely to save IHT, I meant generally. Best used where QSR is not available (say for instance because the estate of the second person to die is fully or partly exempt).

Say for example that Nellie and Gertrude are sisters and are both worth £500k. Nellie dies first and leaves it all to Gertrude. Then Gertrude dies 18 months later leaving it all to charity X. On Nellie's death there will be £70,000 IHT to pay so Charity X will inherit £930k.

However, if when Gertrude dies, the Will of Nellie is varied to "leapfrog" Gertrude and leave it all to Charity X then HMRCS have to refund the £70k since legacies to charity are exempt.

It's also useful when full use of the nrb's has not been made.

[New Judge]

Yes I was missing something. Thanks Barmaid.

[dotty.]

why doesn't she keep the maximum amount she can have as savings under the means testing system and redirect the rest?

[twix123]

If she should have to go into a Care Home, could she be charged with deprivation of assets by the local authority should they find out she had previously inherited £50K?

[mockingbird]

I agree about it being immoral and I also agree that she should enjoy the money these are great responses - you seem to have enjoyed the scenario as well- ps it is real -friend's decorator is the son and he told her the tale -

[mockingbird]

Thank you all so much - these have been great responses- think you enjoyed it as well- true- friend's decorator is the son- I agree immoral and she should enjoy the cash

[themas]

New Judge

It's not the IHT on the deceased's estate which is avoided, but potentially IHT on the beneficiary's estate. So if this 83 yr old had an estate when she dies which would attract IHT, the IHT would be reduced or avoided if she did a DoV & did not receive the £50K.

[JonnyBoy12]

I am with the rest of you on this one. If you can support yourself then you should, otherwise you are a burden to the taxpayer. I know from experience that if you get found out delibrately depreciating your own capital then your benefits can be cut, as you should have supported yourself until the money runs out.

Sorry I can not be of more help.

[dzug2]

Isn't Inheritance Tax a total red herring here? If she is on benefits then her estate is not going to be large enough to reach the threshold anyway, surely?

It's the deprivation of assets in relation to benefits and care home fees that is the issue - if she refuses the bequest/gifts it to her son either by DoV or directly does she fall foul of that?