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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To mention to my healthy parents in their early 70s to think about avoiding inheritance tax

156 replies

Soamiasnob · 12/12/2014 11:52

Its a morbid subject, but I know you have to sort these things out 7 years in advance to avoid IT.

Aibu to mention that they should think about it now?

They have inherited a lot from one side, and I know do want to pass it on.

OP posts:
DevonLodger · 12/12/2014 12:43

I agree it's a fair tax. For most people with something to leave no tax will be paid at all on an estate up to £650,000. A very generous relief which covers virtually all the population. The London and SE homeowners will say that their parents houses are worth far more than that. But they have benefited massively from crazy house price inflation and a permanent private residence relief which has previously seen them pay no tax at all on their property. IHT is an attempt to stop the rich getting richer and the poor getting poorer.

Binkybix · 12/12/2014 12:44

I will never understand why people think a tax on something they're given is any more unfair than money being taken from someone who has actually earnt it, but I'm in the minority I think.

As I say, I don't think we should tax on principle to punish the wealthy, but insofar as some taxes are required I think it's at the 'fair' end of the spectrum.

calmexterior · 12/12/2014 12:47

No way I would mention it - it's up to them, anything else just sounds awful IMO. I lost a parent in my teens and you can't put a price on that. Sounds like you'll get some cash anyway - nice eh?!

farewelltoarms · 12/12/2014 12:48

I have this very issue. All of my parents' money is money that they themselves have inherited so it feels a bit frustrating that they're going to piss away a large chunk of it on tax. I don't mind not inheriting anything but I would want that to be an active choice on their part rather than just their belief that they are immortal. They have a huge amount in sitting in a bank account which they refuse to touch, only living on interest and given that my father is 80, they have no mortgage etc it's a bit short sighted.

On the other hand, when I did try to bring it up, it went really badly. It's hard not to sound like Lear's ungrateful daughters even though I stress that I'm happy if they want to give the money to charity, but just do some proper planning.

And yes IHT is a fair tax, but that doesn't mean that it's not worth thinking about it in advance.

WooWooOwl · 12/12/2014 12:53

Fish, that argument assumes that there are two married parents in the equation which often isn't the reality, and you're talking about marital assets being passed tax free to a spouse.

A lot of average houses are worth more than £325k now that house price have risen so dramatically and the tax can now affect below average income families. This tax was never intended to do that. It should be a tax on the rich, not the average.

ArcheryAnnie · 12/12/2014 12:59

I can't imagine doing this. However much you dress it up, it will always give the flavour of you hovering over them, waiting for your inheritance.

magpieginglebells · 12/12/2014 13:01

I wouldn't mention it. It's up to them. I know the inlaws have done their best to get out of it but it came from them. There is no way of bringing up the conversation without it sounding like you're waiting for payday,

OneHandFlapping · 12/12/2014 13:04

Inherited wealth s one of the main ways that the wealthy preserve their privilege down through the generations.

There is a massive difference between knowing you will inherit a nice nest egg in the fullness of time, and knowing you will get nothing.

Inheritance just preserves inequality.

Chandon · 12/12/2014 13:06

I would never broach this with my parents.

It feels in bad taste, however you dress it up, and grabby.

My parents are smart enough to sort their own finances.

I hope they use all their money to get state of the art support/help/comfort if they should ever become ill or frail.

We, their children, are grown up and can look after ourselves.

Original poster
Soamiasnob · 12/12/2014 13:10

I don't think I can not mention it to be honest, if house prices remain at current level it is a 6 figure amount I would miss out on and I trust me more than a government to make good use of it.

I'm not going to go in all guns blazing, but causaly bring up the topic. They are not stupid, they know that there not immortal. I think they would be heartbroken to know if they lost a large chunk of stuff they inherited to the tax man and didn't pass it on.

OP posts:
BackOnlyBriefly · 12/12/2014 13:12

Unless you are so close to someone that you can say "I was thinking how much money there'll be when you snuff it" and KNOW they will laugh then it's best not to mention it at all.

It's really not the place of the possible beneficiary to get involved. They may still be thinking about leaving it to a cat's home. It's none of your business until they are gone.

As for unfair taxes, there are no 'fair' taxes really. A decent government just tries to take from those who won't be so badly harmed by it.

btw I hope no one who has that conversation criticises Amazon etc for paying the least tax. It's the same principle if you set out to avoid inheritance tax.

BreakingDad77 · 12/12/2014 13:12

Yes and I would also say lasting powers of attorney as well.

Is sad as dad had scrimped and saved all his life as he wanted to pass the house etc on to us, even though we told him and mum (while she was still alive) to enjoy himself.

He is tipping into dementia and the house etc will all get taken to pay for his care till its all gone (which wont be long) and then switch to state paid.

WooWooOwl · 12/12/2014 13:14

Could you start the conversation by asking where all the relevant paperwork is as you want to know where to find their wills and stuff when the times comes?

ZeViteVitchofCwismas · 12/12/2014 13:15

Whilst I always think of King Lear in this scenario, I think YANBU. I'm sure they don't want IT to apply any more than you do.Grin

I think in an ideal world people should sort out wills before they die, and be open and honest where they can be about intentions.

you know your parents and how they would feel about such a convo.....

maninawomansworld · 12/12/2014 13:17

YANBU at all. Most people would rather their hard earned money went to their children than the tax man!

I am 39 years old, my parents are in their late 60's. They begun the process of 'giving' me my inheritance a number of years ago/.
It took a while but with a really good independent financial advisor they managed to get the lot (family farm + other properties - about £7m) into my name in under 10 years without paying any tax.
If we'd have done it the 'honest' way I would have had to sell the farm and land that has been in my family for 400 years. I would have had no home and no business.
I struggle to think of anything more awful that inheritance tax.

DevonLodger · 12/12/2014 13:20

If they are not stupid then why do you think they won't already be fully aware of the fact that on death significant estates get taxed. Doesn't everyone understand that. Why do you feel you "can't not mention it".

PlumpingUpPartridge · 12/12/2014 13:21

Yes, I did mean that IT starts when the value is >£325000. Apologies for not making that clearer.

If the value of assets is 324999, then your bill is 0. If it's 325000, then your bill is 130000. That's what I meant when I called it the minimum bill - it's an actual bill (as opposed to being 'charged' zero).

Ironically, op, I'd say that if your parents are intelligent and sensible people then they will probably already be thinking about tax issues. If they're not intelligent and sensible, then they will resent you bringing it up. Not sure you can really change the situation much!

Innocuoususername · 12/12/2014 13:22

Regardless of whether or not you think inheritance tax is fair or not, I think YABU to raise the subject in this way. I'm with PP who said its like you are hovering over them waiting for your inheritance, very grabby.

I would have a general conversation about wills (inc where they are stored, who are the executors), power of attorney, even their wishes for their funerals: but actually who gets what and how to structure it to avoid tax? No. Their business completely.

Handsoff7 · 12/12/2014 13:25

IHT provokes strange reactions. You are planning to deprive other taxpayers of over £100k that should be paid. Imagine if someone had scammed £100k in fraudulent benefits, they would not be getting all the YANBUs.

The net effect on the rest of us is the same from either situation happening though - 100k more to be found from taxes.

That being said, I blame the government for allowing loopholes for people to avoid the tax. As an individual most people will seek to avoid tax where possible and legal so in that sense YANBU. I just wish it wasn't possible to opt out.

Theoretician · 12/12/2014 13:31

If the value of assets is 324999, then your bill is 0. If it's 325000, then your bill is 130000.

I think if the value is £325,000, the bill is £0. If it is £325,001, the bill is 40p.

JeanneDeMontbaston · 12/12/2014 13:34

YABU.

Don't you think your parents are capable of figuring it out for themselves?

It's not your money. It may never be your money.

MrsBennington · 12/12/2014 13:35

Plumping if your inheritance is 325000 you pay 0. If it is 325001 you will have a bill of 0.40 at 40%. The first £325 is Tax free.

TinklyLittleLaugh · 12/12/2014 13:36

DP and I have an estate worth seven figures. And every single bit of it we have earned ourselves. We have already paid income tax on it, we have paid tax on any interest it receives. We have no intention of paying inheritance tax as well.

These days it is basically a tax on the ill prepared; anyone with any sense plans for these things. That is why probably only 6% of estates are taxed.

MsRinky · 12/12/2014 13:36

If they've "inherited a lot "themselves, why do you seem to be convinced they are unaware of inheritance tax and would be "heartbroken" if "they" (you) "lost" money to the taxman.

Partridge, your sums are completely wrong. On an estate of £325k the tax bill is zero. On £325,001 it is 40p. The tax is only levied on the amount over the allowance, not on the whole estate.

flightywoman · 12/12/2014 13:38

My mum got landed with a huge bill purely my grandparents bought a house in the late 60s which has since increased in value. It happens to be a nice house in a good location - neither of those were her decision, nor does she has any control over the UK property market. It was just chance they made a good choice.

When my gf died my mum had looked after him for 6 years, invested in the house after selling her house, and because they were badly advised the potentially exempt transfer wasn't valid. Everything he left for her to live on was spent on the tax bill.

It's not fair, it's not what was intended, my family aren't rich by any means - why should the government benefit from the death of my beloved family and one fortunate purchase nearly 50 years ago?