GP not sorting out their money gifting properly WHO will have to pay any IT ???

It depends how much is gifted and how long afterwards the person who gifted dies.

When you apply for probate - there is a section to list gifts given in the last 7 years. These are the first thing counted against the IHT nil rate allowances (usually 325K per person or 500K if they are leaving a primary residence to children or grandchildren). So if the gifts are less than this - there is no IHT to pay - but it 'uses' up the allowances. IHT is paid out of the remaining estate before the residual is paid to the residual beneficiaries.

If the gifts exceed the IHT threshold, I think the tax on the gifts and the tax due on the remaining estate is still paid from the residual estate - so it is coming out of money that would otherwise go to these beneficiaries. If there isn't sufficient money in the residual estate, HMRC can go back to the gift recipients. I am not sure what happens on the first death if the remaining spouse inherits. The IHT may only be due on the second death but I am not sure.

Make sure very good records are kept of any gifts - particularly if there are also gifts from 'surplus income' ss these are harder to prove. Everyone also has the ability to gift 3K per year free of IHT. And if you survive for a full 7 years after gifting, the gifts don't count either.

I would have thought it would come out of the part of the estate that they still own. Presumably they'll still own a property and other assets, which will be substantial.

But if they're in a position where IHT planning is a consideration, probably best to pay for advice from someone who can see their entire situation and answer questions like this.

If the total amount of the gifts is under the nil rate band (the amount you can pass on tax free after death), then any gifts that are made within 7 years will used up the nil rate band first (so no tax to pay for those gifts). If it’s more than the nil rate band then the people who received the gifts would be liable, unless provision is made in the grandparents will to cover that cost before giving out the rest of the estate.

There is a form you will out if you claim this when they die. Can’t remember the name of it. We keep spreadsheets based on the government form so when the time comes it should be easy. You have to record their bills etc to show they still ah e their normal quality of life. Our accountant also advised a signed letter stating certain things eg they are under no obligation. Isn’t there a rule about it being regular as well? The Telegraph often have good advice on this

As PP says, if they survive more than 7 years it doesn’t matter. If they die within 7 years then they are pulled back into the estate for IHT purposes. In terms of who pays- the estate of the deceased usually pays if there is enough left in there to cover it, if there isn’t enough left to cover it though then the recipients of the gift are then liable so the 18 year old is responsible for their share, the 12 year old wouldn’t be liable but their parent/guardian would be liable on their behalf from the funds held for them.

Firstly, nothing they give more than 7 years before their death will attract IHT. Any tax due is then paid by the estate on their death so long as the total value of gifts doesn’t exceed the nil bad (325k ish), not by the recipient of the gift so if they still have the house then it would likely come out of the proceeds of that. There are also annual exemptions/ nil bands for gifts so depends how much we’re talking if this is likely to be a problem.

Keep a proper list of all gifts and dates.
I am guessing it comes out of their house or what is left if they die and after you or DCs if not enough is left to cover it but ask an advisor