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Can a father give son £26,000 - tax implications ?

(51 Posts)
gingeroots Sun 17-Jan-16 09:45:11

Grandmother recently died , £80,000 to son ,can so give £26,000 to his son ?

This would be to remedy will " misreading" by son/executor as the £26,000 should have gone direct to son .

But would it be viewed as possissible money laundering /tax evasion ???

DesertOrDessert Sun 17-Jan-16 09:51:00

Think it's only a problem if the father doesn't survive the next 7 years.
Who are the executors of the will? Can it be adjusted?

gingeroots Sun 17-Jan-16 09:55:47

Thanks Desert ,father and his sister are executors .

How would one adjust a will ? The instructions in will are clear ,it's just that the executors haven't carried them out .

We're trying to sort it/get them to see what they've done is incorrect .So if he coughes up the money that should have gone to his son we can avoid lawyers and further unpleastness .

gingeroots Sun 17-Jan-16 09:58:57

Sorry ,too many sons .

Grandmother left equal shares to her two children and 4 grandchildren.

Children are executors . Executors have divided up money between themselves and not passed on to the grandchildren .

butterflymum Sun 17-Jan-16 09:59:57

A 'deed of variation' could be considered. see here for basic info

guineapig1 Sun 17-Jan-16 10:03:39

Well it's not money laundering or tax evasion if it is simply to correct what should have happened under the terms of the will. What about the other grandchildren though? Have they been paid their shares?

gingeroots Sun 17-Jan-16 10:04:54

That's interesting butterfly ,another thing I've learned smile

The problem is not that the will needs changing ,it's fine ,it's just that it's not been executed as per deceased wishes as stated in will .

Postchildrenpregranny Sun 17-Jan-16 10:05:01

Yes do a deed of variation but you have to do within two years of a death and original beneficiary has to agree About to do it but it is quite fiddly
Failing that yes he can just give the money but if he doesn't live for 7 years son will have to pay tax Its a sliding age though

suzannecaravaggio Sun 17-Jan-16 10:05:06

There's no tax due on gifts and surely if the father did die within 7 years it wouldn't make a difference because 26k is under the inheritance tax threshold
Its not uncommon for parents to give large amounts to children, say for a house deposit, the fact that the 26k is coming from inherited money is besides the point

gingeroots Sun 17-Jan-16 10:06:55

Thanks suzanne - seems clear .Of course doesn't matter if money inherited or not .Was getting a bit blinded by the will problems .

Postchildrenpregranny Sun 17-Jan-16 10:10:33

If you do give large sums you generally have to do a written statement saying it's a gift not a loan and the transfer can take a while-presumably while they look into it ( heve just given mo ey to both DDs for house purchase)
Appreciate you don't want to go the legall route but am astonished this can happen When you prove a will I thought you had to take evidence that you had done the dispersments
according to deceased wishes

suzannecaravaggio Sun 17-Jan-16 10:11:27

Sounds like you've been up to the eyeballs in legal stuff!

butterflymum Sun 17-Jan-16 10:13:28

Ah, you posted again whilst I was, so I see it is too late for variation as the money has already been split.

Mmm, bit confused. Do you have sight of a copy of will and does it, without any possible doubt, state the 6 way split that you say should have happened?

An executor has a legal obligation to correctly distribute assets to beneficiaries.

suzannecaravaggio Sun 17-Jan-16 10:15:39

If you do give large sums you generally have to do a written statement saying it's a gift not a loan and the transfer can take a while-presumably while they look into it ( heve just given mo ey to both DDs for house purchase

Suspect that is a condition of the mortgage and they want to make sure thou don't have an interest in the property, or something like that?

Generally speaking you can give your money away if you want to without having to ask permission, but gifts of property or investments can I think have some tax liability

butterflymum Sun 17-Jan-16 10:23:02

If the will was explicitly clear, then really the £26000 would surely be a distribution from the will, albeit belated, and not a personal gift from the parent (who happened to be executor), but it would seem likely something would need put in writing to establish and indeed prove this as presumably the money is already in the personal account of the parent.

Are the other three grandchildren also being given their share by one of the executors?

butterflymum Sun 17-Jan-16 10:29:15

Forgot to check, what ages are the grandchildren?

LittleBearPad Sun 17-Jan-16 10:29:57

The will isn't important to your question.

A parent can give their children any amount of money they wish to. The only issue might be inheritance tax if the parent were to die within seven years and have an estate subject to IHT.

The documentation point raised above about loans/gifts is in respect of house purchases and mortgages not simple gifts.

WhoKn0wsWhereTheMistletoes Sun 17-Jan-16 10:35:53

If they die within 7 years it forms part of the estate for inheritance tax purposes, so the fact that it is under the threshold in its own right doesn't matter, if the father's total estate is liable for inheritance tax this will be too. Keep records, this stuff can be a nightmare for executors (I mean those of father, not those of the grandmother).

HSMMaCM Sun 17-Jan-16 10:58:18

The father isn't giving his son the money though. The son has inherited the money from grandparents will and for some reason his share was paid to his father. They're just correcting the error surely ?

HSMMaCM Sun 17-Jan-16 10:59:26

And the executors could be in big trouble for not distributing the money correctly.

gingeroots Sun 17-Jan-16 12:14:57

Sorry ,been out to Lidls .

Thanks for all advice ,seems that giving the money would be ok .

Yes have seen will , executors misguided/incompetent/criminal . 4 grandchildren ages 17 - 23 .Don't know what's happening to the other 50% of estate .

Trying to sort as amicably as is possible .At this stage .

Amazed that this can happen and that executors can have such freedom/temptation . Presumably only if not using third party solicitors for probate .

Disrepancy only discovered because we got copy of will by on line search .

suzannecaravaggio Sun 17-Jan-16 12:17:04

Blimeyshock

fastdaytears Sun 17-Jan-16 12:22:07

Ah, you posted again whilst I was, so I see it is too late for variation as the money has already been split

Why? If it's within the 2 years it's not too late, regardless of what's been paid out.

If it's not done via a deed of variation then it's a potentially exempt transfer so will be aggregated with dad's estate if he dies within seven years. If he has a chargeable estate for IHT then more would be paid than if a deed of variation was done.

So DoV first choice and doesn't need to involve executors. If more than 2 years has passed or dad has no prospect of having a taxable estate for IHT then a straight gift is fine.

butterflymum Sun 17-Jan-16 12:55:29

Deed of variation not the issue now anyhow, as apparently the grandchildren were clearly included in original will and executors failed in their legal duty to distribute according to same.

Just attempting to breaking this down to help make situation clearer. So OP, one executor has one child and the other has three? Estate was £160000 and split £80000 each between executors, who were also beneficiaries, instead of a 6 way split of approx £26000 each. Executor/beneficiary with one child may 'give' that child £26000, leaving them with £54000? Other executor/beneficiary with three children, if even intending to give them each £26000 from 'their' £80000, would be left with £2000?

Do the other 3 know they have not been given their inheritance as per the will (regardless of whether or not they have been privately 'gifted' some money from the executor/beneficiary). If they don't know and at some stage find out, they may well pursue a legal claim against both original executors.

Can you see that, morally, in attempting to reach an 'amicable' agreement for one grandchild, those doing so could be party to ignoring the law in much the same way the original executors seem to have ignored the law. The whole situation could become even more messy than it already is.

butterflymum Sun 17-Jan-16 12:59:46

correction to above, 'break' not 'breaking'

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