Leaving cars to children in will
Discussion
Hi folks
Currently reviewing my will and now I have an adult son, working through what I want to do as the current will was written when he was a minor. The basic will currently effectively leaves everything to my wife, and if she has passed before me, everything goes to my son via trust and trustees (including provision for his care) given he was a baby when it was written (& covered up to him being aged 21). Wifey has a mirrored will.
We will effectively re-write the will in a more simple form now son is nearly 20 !!
What are the consequences of writing into the will that instead of leaving all my Chattels to my wife, I leave my cars (2) to my son, and everything else to the wife ? Let's assume market value of cars is collectively £100k at time of death ?
Would he be subject to any tax charges if I did that ? If yes, what ..... and can my estate pay those charges as well if that were to be the case ?
I'm assuming I snuff it first in the above scenario, as if not, he gets everything anyway.
Currently reviewing my will and now I have an adult son, working through what I want to do as the current will was written when he was a minor. The basic will currently effectively leaves everything to my wife, and if she has passed before me, everything goes to my son via trust and trustees (including provision for his care) given he was a baby when it was written (& covered up to him being aged 21). Wifey has a mirrored will.
We will effectively re-write the will in a more simple form now son is nearly 20 !!
What are the consequences of writing into the will that instead of leaving all my Chattels to my wife, I leave my cars (2) to my son, and everything else to the wife ? Let's assume market value of cars is collectively £100k at time of death ?
Would he be subject to any tax charges if I did that ? If yes, what ..... and can my estate pay those charges as well if that were to be the case ?
I'm assuming I snuff it first in the above scenario, as if not, he gets everything anyway.
Edited by Steve Campbell on Friday 21st April 14:36
Wombat3 said:
You have your IHT allowance & at those values they could be gifted free of IHT but would utilise some of the allowance. Of course if he'd already owned them for 7 years at the time of your demise ( whether he knew it or not!) then they would be outside of your estate altogether.
Yes this, It's an interesting conundrum as to how HMRC would go about proving you had not bought them as gift for your son at the time and how they would ever get to know anyway The name in the logbook as we know means nothing as far as ownership goes. I have been looking at a similar thing with 5 classic bikes I have with a similar value to the OP and was advised by an accountant to just to tell my lads to take them away when I go wheels upEdited by martinbiz on Friday 21st April 16:01
Wombat3 said:
You have your IHT allowance & at those values they could be gifted free of IHT but would utilise some of the allowance. Of course if he'd already owned them for 7 years at the time of your demise ( whether he knew it or not!) then they would be outside of your estate altogether.
That works until, for example, the son gets married and then divorced. The ex-wife might have a claim to half the cars/value if a clever solicitor looks into it. If you have sole use of your cars while you are alive, then a bit of paper saying they belong to your son may not wash with HMRC.
If you gift them to him now and survive 7 years, then if you still have sole use of them, that's a transparent tax dodge.
A mate of mine is in a slightly similar situation but it's £150k of yacht rather than a car. He tells me owning it 'jointly' helps, (as distinct from owning half shares). I haven't checked this out myself.
If you gift them to him now and survive 7 years, then if you still have sole use of them, that's a transparent tax dodge.
A mate of mine is in a slightly similar situation but it's £150k of yacht rather than a car. He tells me owning it 'jointly' helps, (as distinct from owning half shares). I haven't checked this out myself.
Tony1963 said:
Wombat3 said:
You have your IHT allowance & at those values they could be gifted free of IHT but would utilise some of the allowance. Of course if he'd already owned them for 7 years at the time of your demise ( whether he knew it or not!) then they would be outside of your estate altogether.
That works until, for example, the son gets married and then divorced. The ex-wife might have a claim to half the cars/value if a clever solicitor looks into it. martinbiz said:
That may well happen irrespective of whether they are inherited or gifted before the father dies. Looking at life on that basis means there's no point in owning anything in case the ex nicks it!
If something isn’t gifted to a child well before death, then that child’s divorce settlement (before father’s death) won’t include a share of the father’s cars, as far as I know. Tony1963 said:
Wombat3 said:
You have your IHT allowance & at those values they could be gifted free of IHT but would utilise some of the allowance. Of course if he'd already owned them for 7 years at the time of your demise ( whether he knew it or not!) then they would be outside of your estate altogether.
That works until, for example, the son gets married and then divorced. The ex-wife might have a claim to half the cars/value if a clever solicitor looks into it. Tony1963 said:
martinbiz said:
That may well happen irrespective of whether they are inherited or gifted before the father dies. Looking at life on that basis means there's no point in owning anything in case the ex nicks it!
If something isn’t gifted to a child well before death, then that child’s divorce settlement (before father’s death) won’t include a share of the father’s cars, as far as I know. martinbiz said:
Yes this, It's an interesting conundrum as to how HMRC would go about proving you had not bought them as gift for your son at the time and how they would ever get to know anyway The name in the logbook as we know means nothing as far as ownership goes. I have been looking at a similar thing with 5 classic bikes I have with a similar value to the OP and was advised by an accountant to just to tell my lads to take them away when I go wheels up
The logbook is not definitive proof of ownership. That's not the same as saying that it means nothing as far as ownership goes. In practice there will be a presumption that the registered keeper is the owner unless there's evidence to the contrary.For IHT purposes the car's or bikes (or anything else) will not be treated as a gift if you continue it benefit from them free (see gifts with reservations). If you remain the registered keeper of the bikes, insure them in your name, keep them at your address and ride them regularly (and perhaps fill your social media with pictures of you riding them) then HMRC is not going to have to work very hard to prove that you were benefiting from them, and therefore that they were not a gift. This would apply even if your sons had a piece of paper that said "Merry Christmas lads, have some bikes" or similar.
megaphone said:
Just tell your wife your wishes, if you go before her, she can ensure the cars go to your son. No point in over complicating the wills.
Things might get messy if the OP predeceases his wife, the wife remarries, then the wife predeceases her new husband without making a will. The OP probably wants certainty about who is going to end up owning the cars.Edited by megaphone on Saturday 22 April 09:29
Steve Campbell said:
Hi folks
Currently reviewing my will and now I have an adult son, working through what I want to do as the current will was written when he was a minor. The basic will currently effectively leaves everything to my wife, and if she has passed before me, everything goes to my son via trust and trustees (including provision for his care) given he was a baby when it was written (& covered up to him being aged 21). Wifey has a mirrored will.
We will effectively re-write the will in a more simple form now son is nearly 20 !!
What are the consequences of writing into the will that instead of leaving all my Chattels to my wife, I leave my cars (2) to my son, and everything else to the wife ? Let's assume market value of cars is collectively £100k at time of death ?
Would he be subject to any tax charges if I did that ? If yes, what ..... and can my estate pay those charges as well if that were to be the case ?
I'm assuming I snuff it first in the above scenario, as if not, he gets everything anyway.
IANAL but if you have cars of that value, I'd spend a little and speak to an inheritance specialist rather than us chaps on PH. Look at the benefits of a lifetime trust (will you be driving those cars when you're advanced in years?) etc, and see what works best for your family situation.Currently reviewing my will and now I have an adult son, working through what I want to do as the current will was written when he was a minor. The basic will currently effectively leaves everything to my wife, and if she has passed before me, everything goes to my son via trust and trustees (including provision for his care) given he was a baby when it was written (& covered up to him being aged 21). Wifey has a mirrored will.
We will effectively re-write the will in a more simple form now son is nearly 20 !!
What are the consequences of writing into the will that instead of leaving all my Chattels to my wife, I leave my cars (2) to my son, and everything else to the wife ? Let's assume market value of cars is collectively £100k at time of death ?
Would he be subject to any tax charges if I did that ? If yes, what ..... and can my estate pay those charges as well if that were to be the case ?
I'm assuming I snuff it first in the above scenario, as if not, he gets everything anyway.
Edited by Steve Campbell on Friday 21st April 14:36
Thanks all for responses. I was re-drafting the will on Friday and will definitely take professional advice, but was wondering (it was Friday afternoon) if there was a simple solution. It's likely the value of my cars will decrease with age as I will no longer be able to enjoy them as much.....the question was more to the point if I "go early"....whatever that means.
The cars are a Caterham and an Alfa QF at the moment....(this is PH after all !!)... I hope to be driving them for many years to come but there will come a stage when I won't be able to get into or out of the Caterham and then it will go. I understand if I just ask the wife to give them to son, then they will be considered as part of the estate anyway....so I might aswell name them in the will (or at least say "my cars" so I don't need to amend it if either were to be sold or new ones bought). Given everything else passes to wife free from inheritance tax anyway....and the cars total value is well under IHT limits there would be no tax to pay ? He might have difficulty insuring them though if I pop my clogs sooner rather than later LOL.
The cars are a Caterham and an Alfa QF at the moment....(this is PH after all !!)... I hope to be driving them for many years to come but there will come a stage when I won't be able to get into or out of the Caterham and then it will go. I understand if I just ask the wife to give them to son, then they will be considered as part of the estate anyway....so I might aswell name them in the will (or at least say "my cars" so I don't need to amend it if either were to be sold or new ones bought). Given everything else passes to wife free from inheritance tax anyway....and the cars total value is well under IHT limits there would be no tax to pay ? He might have difficulty insuring them though if I pop my clogs sooner rather than later LOL.
Steve Campbell said:
Thanks all for responses. I was re-drafting the will on Friday and will definitely take professional advice, but was wondering (it was Friday afternoon) if there was a simple solution. It's likely the value of my cars will decrease with age as I will no longer be able to enjoy them as much.....the question was more to the point if I "go early"....whatever that means.
The cars are a Caterham and an Alfa QF at the moment....(this is PH after all !!)... I hope to be driving them for many years to come but there will come a stage when I won't be able to get into or out of the Caterham and then it will go. I understand if I just ask the wife to give them to son, then they will be considered as part of the estate anyway....so I might aswell name them in the will (or at least say "my cars" so I don't need to amend it if either were to be sold or new ones bought). Given everything else passes to wife free from inheritance tax anyway....and the cars total value is well under IHT limits there would be no tax to pay ? He might have difficulty insuring them though if I pop my clogs sooner rather than later LOL.
The problem is you will use up some the IHT allowance, which could be saved for the future when your wife goes, does the rest of the estate value go over £1m inc family home? If so you will need as much of the allowance as possible (or your estate/son will) The cars are a Caterham and an Alfa QF at the moment....(this is PH after all !!)... I hope to be driving them for many years to come but there will come a stage when I won't be able to get into or out of the Caterham and then it will go. I understand if I just ask the wife to give them to son, then they will be considered as part of the estate anyway....so I might aswell name them in the will (or at least say "my cars" so I don't need to amend it if either were to be sold or new ones bought). Given everything else passes to wife free from inheritance tax anyway....and the cars total value is well under IHT limits there would be no tax to pay ? He might have difficulty insuring them though if I pop my clogs sooner rather than later LOL.
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