Inheritance tax - where to go for advice

[Undirection]

My mum has about £200k in savings and a house worth about £800k. She's nearly 80 but in very good health. My sister and I want to get her to sort out how to reduce the inevitable inheritance tax issue but we're not sure who/what type of company to speak to. Can anyone on here point us in the right direction please?

[bobclayton]

Normally the best thing to do in this situation is get Professional Financial Advice - find someone who can identify a solution for you, rather than approaching a company tied to a product. There will be multiple solutions dependant on your individual situation!

[Ginge R]

Undirection said:

My mum has about £200k in savings and a house worth about £800k. She's nearly 80 but in very good health. My sister and I want to get her to sort out how to reduce the inevitable inheritance tax issue but we're not sure who/what type of company to speak to. Can anyone on here point us in the right direction please?

The problem here (forgive me) is that your mum is still relatively young and in good health, so she could live for twenty years or more. Her estate is skewed towards bricks and mortar and not cash (200k is a nice amount, but she probably wouldn't want to start gifting big chunks of that away).

If she was downsizing, her options would be better - one thing though, does she have a deceased partner's IHT allowance to rely on? If so, the IHT liability is (on the surface of it) somewhere in the region of £140k. From 6 April 2017, she'll get a bigger Inheritance Tax threshold if she leaves her home to children (including adopted, foster or stepchildren) or to grandchildren.

https://www.gov.uk/guidance/inheritance-tax-reside...

If she's in good health, the initial course of action would be to consider insurance for the amount and written into trust - if she wanted to gift, she could write it as a gift inter-vivos, which means, effectively, life cover which draws down over a seven year period. Other options would be investments written into Business Relief etc, but that doesn't sound suitable under the circumstances. Without knowing all the facts, a good IFA will be able to help - but erring on the side of caution, I'd suggest starting here.

http://societyoflaterlifeadvisers.co.uk

Edit: Vivos, not vivid! Spell checker gawn maaad.

Edited by Ginge R on Monday 12th December 13:49

[sumo69]

Following Ginge's post, I have a client who is a member of the Society of Later Life Advisors - if you want me to put the 2 of you in touch, please PM me your name and contact details.

He would be more than happy to discuss your issues with no obligation.

David

[megaphone]

Depending on circumstances, the easiest option is for your mother to downsize, sell the house, move into something smaller and probably easier to manage. Gift her children the balance. If she lives for 7 years then there is no IHT on the gift. You get the money now, when you may need it, rather than in 10-20 years. But would she be willing to move?

[Ginge R]

Going off at a slight tangent, one to keep an eye on today.

https://www.ft.com/content/8f4571f2-c08c-11e6-81c2...

If the paywall keeps you out, search 'Supreme Court to rule in bitter £486,000 inheritance dispute'.

[Undirection]

Thanks all, downsizing isn't going to happen anytime soon so its more about the savings.

[megaphone]

Undirection said:

Thanks all, downsizing isn't going to happen anytime soon so its more about the savings.

I'm seeing this a lot amongst my friends, I have quite a few in a similar situation. Parent(s) don't want the upheaval of moving, are attached to their home, it's understandable but does not help the IHT situation!

Speak to her about gifting some of the savings, what does she really need to live on? Does she have pensions? Are her savings growing, does she spend the pension or is it building up in savings? If so the IHT issue will only get worse.

Best give away the money now, let the younger generation benefit from it when they really need it. Grandchildren going to university etc. Deposits for them to buy a home.