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

[Soamiasnob]

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.

Is it just because they are over 70 that you are assuming they don't know?
Inheritance tax planning is part of the will making process and any decent solicitor drawing up wills should make sure the matter is covered.

I would start by relating a fictional anecdote about a friend who's parents died intestate and all the stress and hassle that causes. Then ask if their wills are up to date. Wills should be reviewed every five years. If they made one 30 years ago it may well need updating.

DH and I have revised our wills recently from those we made when DC were tiny. They are now teenagers and our perspective is different. We have covered IHT as well. We have also discussed it with them.

Secret, I think your point about wills is way, way, way more important than inheritance tax - all this worry about inheritance yet thousands of people die in this country every year without making a will!!

Dh and I have had wills since our early 20s and have updated them at least four times (now in our early 40s with two small DC).

MAKE A WILL!!!!

Quite right Tinkly.

I can't see anything morbid in discussing what will happen to your estate when you die. We have plenty of cheerful conversations about it with our DSs. On the other hand it is clear from quite a few of the posts, that some people find it distateful.

OP, as suggested, try to raise the subject casually, then procede with caution and certainly attempt to ensure they get professional advice.

I think IHT is neither fair nor unfair, possibly veering towards fair. We are relatively one of the wealthiest countries in the world and still fail to provide properly in many cases for the sick, elderly, vulnerable or very young.

I wonder if it would work for IHT to be a dedicated tax, so that people do agree that any IHT that should fall due on their estate should go towards a particular area of public spending? Eg. Heath, education, overseas aid. I could see people getting on board with that.

YABU

You're still going to inherit a fortune, which you've not earned yourself and which is more than most people. Just be grateful for that and having your parents around so long. Grabby and entitled imo and I bet you'd be the first to complain about benefit cheats and so on. Trying to avoid IHT no different in my opinion. I think IHT should actually be increased to make a fairer society.

I find it incredible that middle-class people have no problem with tax evasion, but they're happy to castigate genuinely poor people who need benefits. The fact is, if you receive more than £300 000 as a lump sum, you are, by definition, wealthy. The only way for society to be more fair and equal is to try and limit the way privilege and money cascade down the generations.

If you are a person who bought a house fifty years ago and you've seen it rise in value, lucky you, you still get to pass most of the value onto your offspring. There are plenty of people who couldn't afford a house fifty years ago and can't afford one now. Generally it's not because they're slackers, it's because of poverty, lack of education, chance etc.

Whilst it never feels good to pay tax, I would much rather inherit less from my parents than see my local hospital get closed or more people needing to turn to food banks.

I would tread very carefully. By asking them you could appear that you are thinking they are stupid and don't know or are being grabby.

I know if someone I had not approached about the subject spoke to me about it especially from the view point that it was something that would impact on them I would think them presumptive and more than likely make a point of telling them they did not need to concern themselves about something that was nothing to do with them.

I would never discuss something like this with my parents. Whilst there is nothing morbid about someone discussing what will happen with their estate when they die it is greedy of a potential beneficiary to bring up the subject with the aim of ensuring that they get as much money as possible when their parents are dead.

Hear hear broccoliear!

We just recently updated our wills and our solicitor looked genuinely horrified when I said I had no interest in his suggestions for evading inheritance tax - I expect my sons to make their own money not wait for me to cark it to grab my cash!

broccoliear I totally agree!!

My Dad in his early 70s is a retired solicitor. He is very upfront about what he has done. However he is not going to be able to pass on his assets to us now...he needs them! I guess his estate if he died tomorrow would be about £700k (mum died years ago) and so IHT will be payable on a chunk.

The majority of that us his house, and then his pensions...not sure what he could pass over now in any event.

Yes we will be hit by IHT, but I don't have a problem with that. I see myself as very lucky, and anything I inherit after hmrc take their slice will be a bonus.

OP you should broach the subject in a tactful way...are your affairs in order? Wills? But I would stay away from suggesting they start transferring assets.

OP, I don't think you're being unreasonable to raise it with them.

With regards to the reasonablness (or otherwise) of the tax, I personally stand to benefit from an inheritance (as will my wife) - though of course we don't know what's around the corner. I think the current system stinks. I beleive that the fairest way to deal with it would be to maintain the relief which exists between spouses and then tax any bequests at the marginal rate of the recipient. It really is that simple. That way, the estate pays no tax and we maintain a degree of progressiveness.

Dapplegrey Re King Lear - I don't blame G for being pissed off.

She must have been feeling mightily pissed off when she blinded Gloucester and poisoned her sister.

My DM passed away unexpectedly 6 weeks ago and I'm in the process of dealing with her estate.

Inheritance tax is a tax on the estate, not the beneficiary. I know, because we talked about it in the past, that my mum was fuming that she had worked for 40 years, made sensible decisions about her finances and paid all her tax bills (at a 40% taxation level) only to have everything she worked so hard for taxed AGAIN because she hadn't frittered it away before she died. She did a number of things to mitigate that, but ultimately my sister and I - at the ages of 25 and 29 respectively - have a large tax bill to pay. And no, we don't have that sort of money just kicking around, it's actually insulting to assume people receiving that sort of inheritance would; we're in a completely different stage of life to mum and she was (rightly) not in the habit of giving handouts. Her main asset was her property which is in London and has increased in value by over 800% since she bought it 25 years ago.

Talk to your parents. Ask them if they want to pay the taxman for all their assets again, after they've paid for them once already. It's not grabby, it's sound financial planning.

LBCOS I'm sorry for your loss.

If your late mother's property (I'm assuming this is the main asset - though of course I may be wrong) has increased in value8-fold then the money isn't exactly earned. Also, you and your sister will only be required to pay 40% on anything over the threshold. Also, I suppose if you wanted to keep the asset you'd have to pay the tax. If not, then surely it just comes out oof the estate.

It is actually quite normal to pay tax twice - we do it in lots of different situations. Every time you use your (taxed) salary to buy goods with VAT, you are taxed twice - same when you fill up the car with petrol or buy alcohol where duty is included in the price. Stamp duty when you buy a house is another example of "extra" tax.

"It's not a 'bit' of inheritance, though, Princess. It's a bill of 40% of the value of the inheritance (starting at £325000). So the minimum bill is £130000 and they want that paid"

I'm not sure this is true - you get £325,000 tax-free and pay 40% on the remainder. I don't get the hate for IHT - you get something for nothing. Yes parents have paid tax on it already but I've already paid income tax on the money I then use to pay council tax, VAT, fuel tax etc. I'm quite happy to get £325K for nothing (or £650K with two parents) and then pay 40% tax on what's left.

Nobody likes tax but everyone is up in arms when libraries are closed, bus routes are axed, elderly care is awful. You can't have it both ways.

I think inheritance tax, whatever its merits/problems, is a cost which is incurred at a time when people are often struggling to cope with a death. That's not going to endear it to anyone.

Huh!! If my DD started to talk about inheritance, I'd know what she was after!! So she would get nowhere with me on that topic.

It is actually quite normal to pay tax twice - we do it in lots of different situations. Every time you use your (taxed) salary to buy goods with VAT, you are taxed twice - same when you fill up the car with petrol or buy alcohol where duty is included in the price.

But if you bought a bottle of wine and gifted it to a loved one they would not be taxed on it.

Stamp duty when you buy a house is another example of "extra" tax.
And that is why IT is unfair - it's a 3rd tax using your example above, people pay for a property out of taxed income, pay a tax on buying it and then the estate pays a third tax when it is passed on after death.

well to be honest .my mum said to me at 60 i am writeing my will i just laughed .i said mother you are bloody morbid .i am an only child parents divorced .but she wanted it all official because she had a long term partner .i was to split the proceeds of her flat with partner and keep all insurances and money in bank .not a fortune but enough for to put away for my son,s ....well my darling mam dropped dead of a heart attack 2 weeks after her 62 birthday .no previous illness no nothing .so if i was you i would talk to them if you can .i am now in the process of gaining power of attorney for my 47 year old hubby who has been diagnosed with early onset dementia ...life sometimes does not go how we plan .

But surely you'll sell the house? Isn't that how the tax is paid?

I can't sell the house until probate is granted.

Probate won't be granted until the tax bill (or a proportion thereof) is paid.

Lovely catch 22 situation there.

As it is, the house isn't going to be easy to sell, as it has subsidence.

I think you should speak to them. I also think that you should make clear what support (financial and otherwise) you are willing to commit to, to replace the money they will no longer have.

Doesn't matter how many times you pay tax on money. There's no rule it should be once or twice.

Tax money is not money you owe as in "I got a car and now I have to pay for it". It's your money that the government is going to take in order to fund things that tax payers want funded. People only think income tax or VAT is fair because they are used to it.

It's not 'fair'. It's just a way to take money without (mostly) leaving people without food or shelter.

They use to charge window tax on houses. Not because there's any special cost to the government if you have lots of windows. They are not coming around to clean them. Window tax was a quick and easy way to say "this property owner with 25 windows can probably afford more tax without going hungry compared to this property owner with only 4 windows"

People use to brick up windows apparently to pay less tax. Tax avoidance has been around a while.