Any bank staff around?

[missmoffatt2705]

A friend's elderly father is regularly taking out large amounts of cash, say £10k, to give to grandchildren to reduce his inheritance tax. Apart from the obvious security issues, are there any drawbacks to this? Is there a safer way to transfer the money? Could the grandad meet the grandson at said bank, withdraw the cash and then hand it over to grandchild to pay into his own account? Would bank staff allow this?

I'm in Ireland, but lodging a large amount of money would raise questions re money laundering, nevermind regularly lodging £10k.

That money would be reported to the Revenue Commissioners too and would count towards the threshold for inheritance tax.

Is your friend's father not questioned by his bank in case he's a victim of coercion/financial fraud? It seems odd that no one bats an eyelid to someone regularly withdrawing large sums of cash, nor at a younger person lodging it.

You can’t avoid inheritance tax by giving away money specifically in order to avoid inheritance tax! I’m not sure of the exact terms or sequences but if your friend’s father has an estate potentially large enough to pay inheritance tax, his executors will have to get probate. His recent accounts will have to be submitted and transactions such as you describe will be scrutinised. If he wants to reduce his estate he needs legal advice on inheritance tax planning. You can give away £3000 a year free of IHT, possibly more in some circumstances, but he needs to get advice on how to do this.

Is there a safer way to transfer the money? Yes. I'm sure you've heard of internet and telephone banking.

I'm surprised that the bank is allowing these withdrawals because most banks seem to have taken the stance that anyone moving large amounts of cash around is either involved in tax evasion, money laundering or is a victim of fraud.

If this man has sufficient spare money that he's able to give away multiple gifts of £10k a time, then it's probably worth him seeking proper advice from a financial adviser to make sure he's aware of the implications in relation to inheritance tax and how this can be done most efficiently.

Should he still wish to continue with this plan and he doesn't do internet or telephone banking himself, he could either ask his bank to make the transfers for him, or he could get a trusted relative to help him set up and run an online account - he should set up payments using small sums and this will make the larger transfers run smoother once they're being sent to an existing payee.

If the gentleman is withdrawing large sums of cash the bank teller will ask what it is for as a security measure. People get upset about this but it is trying to prevent fraud and to avoid people being taken advantage of or pressured. Bank staff are really not trying to be nosy, they are trying to ensure customers are protected. They will be asking this gentleman but if he assures them he is not being coerced etc then he can withdraw. But it's incredibly unsafe and bank transfers would be much safer.

As a PP says, he can't avoid inheritance tax as they will check his accounts. He is allowed to gift £3k per annum to children, grandchildren but anymore would be seen as a deliberate deprivation of assets and the money would need to be reinstated ie returned!!

Isn't deprivation of assets only applicable if you die within 7 years of gifting. Why doesn't he just transfer a larger amount into their own bank accounts or write a cheque. Why the grandchildren and not his children. If he dies and there is probate the executors need the past 7 years gifting records to be submitted and will question the amounts and what they were for, it sounds like the whole family know he's doing it to avoid them paying inheritance tax but it also means he avoids care costs if he needs it in the future which is also wrong.

I'm surprised (and shocked) tgat a bank would regularly hand over £10k in to anyone never mind an elderly gentleman.

How is the grandson depositing £10k in cash? In the building society where I work it's £2500 per day limit. Anything over that we would want evidence of the origin of the money - lots of questions would be asked. If this was a regular occurrence- I personally would refuse to accept the transaction as I don't want to be party to money laundering and risk a fine and/or prison

You are only allowed to give each person a certain amount a year. If it's over that, then there could very well be problems down the line, especially if he needs to go into care. It is called intentional deprivation of assets.

There is also the potential concern that he may not quite understand what he is doing, or that he is being coerced into it.

To be honest, I'm quite surprised that the bank hasn't started asking pointed questions already.