The unhelpful nature of Inheritance....

The unhelpful nature of Inheritance....

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Discussion

skinnyman

Original Poster:

1,632 posts

92 months

Thursday 18th May 2017
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Not entirely sure what I'm hoping to achieve with this thread, maybe just to see if others have the same thought process as me.

Recently, not sure how, a conversation with the father in-law turned to the subject of inheritance. He announced that he's currently got £250k 'locked away' for each of his 2 children, to pass on as inheritance. With various investments and such he estimates this to reach £500k each upon his death. (I live in the midlands, not the south, £250k is a substantial amount of money here). Also, his mother isn't doing too well, and when she passes he's likely to get £200k from her estate. This got me thinking how inheritance seems to arrive as the least helpful point in a persons life. He's going to receive £200k, when he's already got £500k in the bank, has recently retired, has a hefty personal pension, and has just bought a retirement house out in the countryside.

So this means that if he lives another 30 yrs, myself and the wife will be in our early 60's, and we'll receive around £500k in inheritance, but by that point we'll be in a similar position to him, and the money won't be overly useful. At 60 I'll have paid off the mortgage, raised 2 kids and put them through uni, and will hopefully have a decent pot of my own, I will have gotten through all the financially straining times of my life, only to receive money at the other end, I wouldn't class it as pointless, just backwards.

At present his son is stuck in the renting loop, unable to buy a house, and his daughter is a full time mother to 2 children, with me working 3 shifts and overtime to pay for it all and a decent sized mortgage. Arguably £250k now would be infinitely more useful to them both than £500k in 30yrs time.

For the record I've told him to just spend it during his retirement, he's earned it, go spend it, but I think he enjoys the thought of looking after his children later on in life.

I don't know what I'm getting here, just musings I guess, but bottom line, inheritance feels very backwards.

Astacus

3,363 posts

233 months

Thursday 18th May 2017
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Could also disappear in care charges later if hes not careful, or get taxed out of existence if the labour party get in. Maybe he would be better off gifting it to his children over a period of time to avoid taxation, or setting up some sort of trust.

TooMany2cvs

29,008 posts

125 months

Thursday 18th May 2017
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Nothing to stop him passing that £200k inheritance straight to his kids, of course...

It could be done by a variation to the will, if the executor agrees, or just as a simple gift from him (but that might have IHT implications if he doesn't live another 7yrs himself).

Chester draws

1,412 posts

109 months

Thursday 18th May 2017
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I agree it would be helpful for it to skip a generation.

Our parents got their inheritance at a time when they didn't need it, but we could have done with some help, with two young kids.

We'll receive some at a time when we won't need it... But our kids will probably be struggling to either get a property, or have kids of their own.

I'd like to think we'd be able to pass on ours to our kids rather than blow it on a static caravan and a freelander like my in-laws did!

.:ian:.

1,921 posts

202 months

Thursday 18th May 2017
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He should tuck it away in things that either don't attract inheritance tax, or are easy to, uh, forget about, when that time comes. Woodland is a good one, agricultural property, gold, stamps, classic Ferraris with you on the V5, etc biggrin
(If you get locked up for tax avoidance, you didnt see me, roight)



richardgcs

150 posts

141 months

Thursday 18th May 2017
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Look up 'deed of variation' .

skinnyman

Original Poster:

1,632 posts

92 months

Thursday 18th May 2017
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It's a difficult one for me because A) he's not my father, & B) it's not my money, but I'm trying to find a nice way of saying "just give us some money Vaughn". I have no right to say that, but money for his children now would certainly be extremely helpful, as oppose to hoarding it all.

Plus, governments move the inheritance goal posts all the time, who knows what the rules will be in 20-30yrs time. I would like to think he'll look at the situation and realise that the imminent £200k would be best going straight to his children.

My grandparents on the other hand are dishing everything out to their grandchildren in their will. They've looked at the situation, seen their children are well off and don't need the money, whereas their grandchildren are struggling by comparison, so they're bypassing their children.

condor

8,837 posts

247 months

Thursday 18th May 2017
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My father has the view that if he needs to have carers at home or go into a care home, he wants the best care possible and is quite happy to fund it from' the kids inheritance'. Which I also think is a good idea.

RTB

8,273 posts

257 months

Thursday 18th May 2017
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This is usually made worse by the fact that the afore mentioned older people have spent 40 or 50 years scrimping and saving and when they have plenty they can't get out of the habit.

My parents could go out and buy a new Range Rover every 12 months, but instead they drive a 3 year old VW Tiguan (with fabric seats). My dad still takes pleasure in seeking out a bargain or fixing some old item and getting more use out of it.

Having said that last year he needed a new heart valve, so rather than wait for the NHS to get round to it he reached in his pocket and went private, maybe he's got his priorities straight.



Edited by RTB on Thursday 18th May 13:48

Phil.

4,755 posts

249 months

Thursday 18th May 2017
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If the father-in-law hangs on to the cash until he dies it will most probably be taxed at 40% before you receive any, meaning you get £300k rather than £500k, thus virtually eliminating the planned gains on the current amount (£250k) over the next 30 years.

He would be far better gifting it to you tax free now assuming he lives for the next 7 years. If he is worried about future care costs then he can agree with you to invest it (or some of it) and make it available to him in the future if required. Obviously this will have to be based on trust rather than a legal agreement.

I agree about the timing of inheritance. My mother has just downsized her home gifting some of the difference to her siblings. I have invested all of my share on behalf of my two teenage kids (in their names) with the hope that it will provide them with a decent desposit for a house in a few years time.

skinnyman

Original Poster:

1,632 posts

92 months

Thursday 18th May 2017
quotequote all
Phil. said:
If the father-in-law hangs on to the cash until he dies it will most probably be taxed at 40% before you receive any, meaning you get £300k rather than £500k, thus virtually eliminating the planned gains on the current amount (£250k) over the next 30 years.
Whilst I agree with this the issue is finding the correct way of suggesting this without coming across as money grabbing.

Rude-boy

22,227 posts

232 months

Thursday 18th May 2017
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richardgcs said:
Look up 'deed of variation' .
From the sounds of your post he is an open and fair minded guy who is willing to talk about the topic (not everyone is, there are some out there who just will not talk about it or try to hold inheritance over the heads of others as a way to control).

With this in mind perhaps you and your wife could broach the subject of if, and when when, his mother passes away and assuming that he is the sole residual beneficiary of her will, would he wish to inherit that money or would he like to look at the possibility of it going equally between his two children at that time, rather than when he passes on? If he is receptive to the idea then suggest that he speaks to his solicitor about a possible deed of variation of his mothers will as, when and if it happens. You never know Granny might be in Tobago with Lucious by mid June wink

Rude-boy

22,227 posts

232 months

Thursday 18th May 2017
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skinnyman said:
Whilst I agree with this the issue is finding the correct way of suggesting this without coming across as money grabbing.
My family are more than well aware that i would wish to have them over their money, it has always been thus. That is why we are able to have open and honest conversations about this.

I know others who don't even know if they are in or out of wills because it is not the done thing to talk about wills in their family and to do so is always seen as being money grabbing and causes upset, even when one sibling might know the full detail and other ones not.

Then there are those who use the old 'I might cut you out the will' trick to try to keep people on a string, who are the scum of the earth in my book.

Only you know FiL well enough to know how much and in what tones you can discuss this.

My attitude is that you should never expect a bean, but that if there is a bean then it should always be dealt with fairly.

WindyCommon

3,354 posts

238 months

Thursday 18th May 2017
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Rude-boy said:
richardgcs said:
Look up 'deed of variation' .
From the sounds of your post he is an open and fair minded guy who is willing to talk about the topic (not everyone is, there are some out there who just will not talk about it or try to hold inheritance over the heads of others as a way to control).

With this in mind perhaps you and your wife could broach the subject of if, and when when, his mother passes away and assuming that he is the sole residual beneficiary of her will, would he wish to inherit that money or would he like to look at the possibility of it going equally between his two children at that time, rather than when he passes on? If he is receptive to the idea then suggest that he speaks to his solicitor about a possible deed of variation of his mothers will as, when and if it happens. You never know Granny might be in Tobago with Lucious by mid June wink
Grandchildren might be a better received appeal when you ask your father-in-law for his money.

Smitters

3,995 posts

156 months

Thursday 18th May 2017
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My grandparents made a small gift to their children and a larger one to their grandchildren. I expect my parents to do the same to me/their grandchildren and I hope to be in a position to do the same. The money received in my case made a significant impact and made it possible for my cousin to continue his higher education, so I would say it had the intended effect, hence my own plans.

LeoSayer

7,299 posts

243 months

Thursday 18th May 2017
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What motivates an elderly person to tell you they will give you loads of money at an indeterminate point in the future?

Hoofy

76,253 posts

281 months

Thursday 18th May 2017
quotequote all
RTB said:
This is usually made worse by the fact that the afore mentioned older people have spent 40 or 50 years scrimping and saving and when they have plenty they can't get out of the habit.

My parents could go out and buy a new Range Rover every 12 months, but instead they drive a 3 year old VW Tiguan (with fabric seats). My dad still takes pleasure in seeking out a bargain or fixing some old item and getting more use out of it.

Having said that last year he needed a new heart valve, so rather than wait for the NHS to get round to it he reached in his pocket and went private, maybe he's got his priorities straight.

Edited by RTB on Thursday 18th May 13:48
Thought you were about to say he reached into his pocket, whipped out a scalpel and sorted the heart valve out himself. biggrin

Rude-boy

22,227 posts

232 months

Thursday 18th May 2017
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WindyCommon said:
Grandchildren might be a better received appeal when you ask your father-in-law for his money.
Agreed!

tankplanker

2,479 posts

278 months

Thursday 18th May 2017
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I plan on giving any inheritance I get from my parents (divorced so separate assets now) straight to my kids as I don't need it. I've also put money aside over the years for them, which will go towards a house. I could keep that money with my other savings (and it is a substantial percentage of my overall non pension savings) for when I retire or pass it on as inheritance but I'd rather benefit my kids when they need it most.

jeff m2

2,060 posts

150 months

Thursday 18th May 2017
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Longevity of others is a real bugger biggrin