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AIBU to not want anything to do with PILs 'Inheritance Planning' ?

(125 Posts)
TheRabbitCatcher Sun 05-May-13 13:44:14

I've namechanged as this is quite a personal issue.

PILs are (very amicably) divorced and, through shrewd house purchases, hard work and their own inheritances have decent-sized estates (about 4-5m between them I guess).

Recently they have approached DH several times to discuss 'inheritance planning'. He has no interest in the actual money and doesn't care for tax dodges so has suggested that they speak to a professional who can help them to decide what to do. Actually, I think that he is terrified of the idea of his parents dying, but that's not the reason he gave them. While I respect DH's wish not to discuss the issue, this has led to PILs now coming to me to ask if I can 'encourage' DH to engage or become involved myself. I don't feel comfortable talking to them about their money either so have taken to changing the subject or found reasons to avoid any lunches clearly planned to discuss the topic (this tactic is not long-term, I know). I know that they read our lack of interest as being unsupportive of them and irresponsible (towards them and our children, who I suppose would gain the most out of their planning). To them, I think that leaving a 'good' inheritance is important, especially as their parents did this. While I am happy to support them in other ways, I feel very uncomfortable talking about this (basically, discussing how we could gain the most out of their deaths) and know them to be more than capable of making the 'right' choices without our involvement. My own family is not especially well off and Quaker, all this feels a bit alien to me.

AI (and my husband) BU?

Musicaltheatremum Sun 05-May-13 16:33:39

You have to face up to it. We knew when my husband was 38 and our children 6 and 4 that he would die young so we were able to financially plan things. He died aged 50 and everything on the legal side was wonderfully easy. Even took out a school feels policy so the fees were covered and 4 years of university so I don't have to worry about the drop in income.

whistleahappytune Sun 05-May-13 16:37:36

Rabbit I think you're being incredibly precious about this. Can you and your DH get over your posturing and squeemishness and help an older couple organise their affairs?

They are being responsible loving parents. They want to involve you, as likely it's not all about money. You can support them, listen to them and get involved as they wish you to. Oh, and you might express your gratitude, too.

FFS is this actually a problem?

Nanny0gg England Sun 05-May-13 16:44:50

whistleahappytune I agree.

Sorting things out after the 'event' is hideous and complicated and often ends up costing money which you shell out to all sorts of people, not just the taxman.

I can't believe how sensible your ILs are being, and how both of their children are throwing it back at them.

sarahtigh Sun 05-May-13 16:58:34

I think if it is about stuff they may want to know if you have a favourite painting or something so you can choose and DC they maybe hurt that you do not want to choose like it is saying you think all their stuff is horrible, they would rather you chose painting furniture you liked etc of course antiques etc will be valued for tax man and tax needs to be paid they may also want to set up account to pay the tax as tax on 4 million will be 1.75m and your DH and his bro will need to pay this within 6 months of probate whether house has sold or not

i think both DH and his brother and you are BU and a bit selfish by refusing to even discuss what they have to say a solicitor / accountant can sort the money but what about the possessions/ art; whether you will or will not accept powers of attorney if they become incapable not just for money but welfare too, will you act as trustees for money left to your children, they need these questions answering and to refuse to answer is not good,

you can still answer these questions and say you would prefer their lawyer/ accountant to draw up exact details

I think you should think about your opinion instead of opting out

K8Middleton Sun 05-May-13 17:28:43

Just to give the flip side of not discussing it with anyone and yet still doing the IHT planning: one of my grandparents did this. There was plenty of planning, a trust etc and all the paperwork from when the spouse had died. But we still had to do a deed of variation and there was huge upset at the reading of the will (an equal share left to a son in law as gp's own child, money only to be held in trust for a grown up child etc etc).

Thankfully it was all very civilised and most of the people involved behaved very magnanimously to get the deed of variation through... but, we are more than 4 years down the line and the main asset remains unsold but gathering additional costs every year, a relative is still living in it (nightmare to sort out and the longer the executor leaves it the worse it gets) and the solicitor keeps racking up billable hours which are being paid for out of the estate.

What made it all worse was the shock of some of the decisions. The will felt so very unfair and nobody could have predicted it. Had there been a conversation before hand things could have been so very different.

alpinemeadow Sun 05-May-13 18:09:24

In some cases if the estate includes a house, you do get longer to pay the iht - see the website.
But i have to admit, having read the posts of people who have had bad experiences when there havent been discussions, i can see that there are very good arguments for talking about it now!

you can't sell a house until the iht has been paid. you have to pay iht, then wait for a receipt from hmrc which can take up to 12 weeks, then you can apply for probate which is the point at which the assets get transferred to the beneficiaries names and only at that point can a house be sold.

(bitter experience)

alpinemeadow Sun 05-May-13 20:39:36

That's interesting claudedebussy - i found some info on the hmrc website (I know, I surely should have better things to do!) which suggested you might get more time in some cases. How do most executors/beneficiaries fund the inheritance tax if someone dies leaving property but no liquid savings - do they have to take out a bridging loan, as a poster suggested below?
All in all, looks as though there is a lot to be said for discussing it - despite the real emotional pitfalls!

i don't know if hmrc allow leniency tbh, alpinemeadow.

that's the standard method.

i guess if you can't pay the iht then there's a stalemate and the asset just sits there depreciating. so they must allow some leeway. you probably just have to prove you can't pay.

HollyBerryBush Sun 05-May-13 20:44:41

I went on a course once, about wills and trusts etc. A quote remained in my head all these years:

The only estates that are liable for inheritance tax are those of people who distrust their relatives more than they dislike the tax man.

Most money can be dispersed, quite legally, through forethought and planning.

I fail to see why the government should take a portion of money that has already been taxed. Taxing the dead is wrong IMHO.

WafflyVersatile Sun 05-May-13 20:49:37

It's not taxing the dead FGS. They're dead.

'It's already been taxed' makes no sense either. Money goes round in circles. It's all been taxed loads of times.

Poosnu Sun 05-May-13 20:51:58

Claudedebussy - IHT on houses can be paid in instalments, so you need to pay 10% before applying for the grant of probate, and then 10% each year plus interest. When the house is sold the IHT bill needs to be paid in full.

The IHT on most other assets needs to be paid in full before probate is granted. The tax bill can be funded by direct bank transfer (there is a scheme to deal with this), loans, or sometimes a portfolio manager will agree to sell investments and transfer to HMRC before probate if he gets the necessary assurances.

HollyBerryBush Sun 05-May-13 20:52:35

It is the estate which is taxed. Not the new recipients of the money. Ergo it is taxing the dead.

greenformica Sun 05-May-13 22:14:22

Can you rephrase it to your DH - your elderly parents need help sorting out their finances, much in the same way they need help with other things. Why not just sit down and discuss things with them?

2rebecca Germany Sun 05-May-13 22:45:12

I don't see why the OP's husband's idea of his parents contacting a professional to discuss inheritence planning is so unreasonable.
I think you need someone fairly independant to discuss this sort of stuff. Your husband could help point them in the right direction as there are alot of dodgy financial advisers out there, but after that I think the decisions should be theirs. There's no reason why a younger person would be more capable of sorting this sort of thing out than an older person and if one sibling gets involved and another doesn't it may cause trouble.
Why are the inlaws so reluctant to just get on with it?

poosnu - thanks. that does make sense.

'Money goes round in circles. It's all been taxed loads of times.'

what a load of bolleaux. i think you'll find it quite tricky to earn.

NeoMaxiZoomDweebie Sun 05-May-13 22:48:29

My PILS did this...well FIL did....it was because he had concerns....he was worried about SIL not wanting to share the house as she's living in it and FIL wanted to make sure there was no misunderstanding about the fact that DH is to have half of it's value when FIL dies.

It bothered him and he wanted it settled. YABU

detoxlatte Sun 05-May-13 22:57:30

If you have any affection or fondness for your PILs (sounds as though you have plenty), you need to look at this from thier perspective.

However difficult it is for you to think about this stuff, it will be a hundred-fold more for them.

By not letting them get their affairs in order, you will undoubtedly be causing them a great deal of stress.

This will sound a bit harsh, but you both really need to grow up and face this stuff. It is hugely immature to say "I don't care about the money" in the same breath as struggling with losing a oarent, especially when there are DGC in the picture, and especially with these sorts of sums.

YAbothBVU.

detoxlatte Sun 05-May-13 22:58:18

Sorry about the typos there!

MaryRobinson Sun 05-May-13 23:06:53

I also think YABU, and think you need to grow up. There are many ways to ensure money is distributed without it being a fiddle.

BTW Your pathological avoidance of the issue won't make them live any longer. They are as mortal as you or I.

MaryRobinson Sun 05-May-13 23:09:32

2rebecca perhaps there are specific things the PIL need to discuss and action now to minimize the value of the estate for iht purposes? That is why they need to talk like grown ups while they are all still alive.

LondonMan Sun 05-May-13 23:12:14

Money goes round in circles. It's all been taxed loads of times.

Since this has been questioned, I want to lend my support to Waffly and say I agree with this.

Consider: you earn some money, some of which you use to pay your plumber. The flow-of-funds from your employer is taxed (your income tax, your employee NI, your employers NI) and the flow of funds on the amount you pay your plumber is taxed again as his income.

The government takes its bite every time money changes hands. The situation with IHT is exactly the same as the plumber example: the money was taxed on the way in, and gets taxed again on the way out.
In the particular case of inheritance, instead of tracking every beneficiary down and giving them a separate bill, it is simpler to just tax the estate.

Wuldric Sun 05-May-13 23:15:04

I don't understand this thread at all. Your PILs are going to die. Not immediately (I hope) but it is inevitable. You are going to die. Have you refused to make sensible wills that make provision for your children's care because of this squeamishness?

Or is it that you just don't want to talk about money? That's more understandable, but again not very sensible. They may want to leave a substantial amount to charity or whatever and want to explain it to you. They may wish to give you/your children some money now, which is the best form of inheritance tax planning. The size of the estates are too small for serious jiggery pokery, so my guess is they want to give you/your DCs some cash now and discuss who would like which bits of furniture/paintings etc. All very sensible.

You're carrying sensibility a tad too far

Xmasbaby11 Sun 05-May-13 23:23:19

YABU - you need to have this conversation with them. It is purely practical. I think it would be much harder to talk about it later on when one of them dies / is ill. I hope you can manage to talk to them soon, then it can be forgotten about.

Casmama Sun 05-May-13 23:26:32

Grow up, both of you. Engage in discussions or tell them you don't want the money. You can't have it both ways.

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