Joint accounts and tax

[mathmos]

So long story short, my father in law is really unwell, terminally so.

I am trying to help both him and my mother in law get their financial situation sorted so she has a lot less to worry about when the time does come when he's no longer around.

As I understand it, they have a number of joint accounts, both savings and current. I was reading something yesterday that anything up to 50% of the funds in those accounts would be subject to inheritance tax.

Is it really as simple as removing his name from a joint account?

[ellroy]

No immediate IHT on first death, there's an inter spousal exemption if they are married.

[mathmos]

if they leave the accounts as they currently are you mean? In joint names?

[driverrob]

On a couple of banking and energy websites I've seen a reference in the FAQ for dealing with the death of a named account holder. I would hope that any decent company would have procedures in place to help you and your mother-in-law cope with what will need doing when your father-in-law does die.

Stay close. Not being a blood relative you may need to provide some documents if you handle their financial matters.

Edited by driverrob on Thursday 7th November 21:46

[ellroy]

mathmos said:

if they leave the accounts as they currently are you mean? In joint names?

Yes, they are jointly owned assets in a marriage, no immediate tax issue.

It is still worth getting advice though, as depending on the size of estate, and Mum in Law's income and capital needs it may make sense to look at giving away some assets at this stage.

But no immediate IHT tax issue to worry about.

[Eric Mc]

I presume they are formally married?

[mathmos]

Yes they are married.

I suspect that they don't have Will's sorted though, and from the little bit of reading that I've done this could be a major source of issues in the future. They also both have children (now grown up) from separate earlier marriages.

[megaphone]

Get them to sort out some wills ASAP, it makes things so much easier! They can appoint executors to deal with the estate, you if you want.

Re the joint accounts. It's reasonably easy to get a deceased name taken off the account, as long as you have the death certificate and grant of probate, however it will be easier to do with a signed letter whilst FIL is still alive.

Getting grant of probate can be a pain without a will, so again get them to make wills ASAP.

Edited by megaphone on Friday 8th November 15:34