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.

we talk about it quite often but we are not afraid of talking about money or tax planning. you can gift any amount out of income as well (if they have a large pension) without the 7 year rule on gifts - read up about it as it is not totally straightforward

I would have no issues with mentioning it at all. My mum knows me well enough to know that I am not sitting around waiting for her to die, grabby or any of those things.

She is 60 and I asked her not so long ago if she could sort something out about planning and paying for her funeral after my grandparents in law did it so their daughter wasn't left with the worry.

It's just practical, we all have to die sometime. We discuss death and everything that goes along with it very frankly.

Mrs T - What you do with a bottle of wine is up to you - you can either drink it yourself or give it away. But, either way, if you buy it, you pay the duty on it so you pay tax twice on your salary. We pay tax twice all the time without thinking about it - it is only IT that attracts a huge amount of fuss and people think it should be an exception.

YANBU
I'm an accountant.
Its scary how ill informed people are till the shit hits the fan.

Talk to them at least so they realise that part of their hard earned cash might go to gorgeous Gideon rather than their family.

BUT
Get them to talk to the solicitor who drew up their wills to sort an accountant and make the appropriate plans.

My parents and I have discussed this. They are late 60s.

They are quite happy with the idea. I told them I didn't care if they want it to go to charity but that it would be a shame for it to be used up on tax or fees.

They are considering putting the house in my name quite soon.

wow, after school club seems to have unlimited access tonight... so much childishness and so much jealousy!

fact - everyone dies so plan for it
fact - those who are going to die (everyone) need to think about what they will leave and where they want it to go. If they want it to go as IHT (in the hope the government will make good use of it), fine. If they don't and can avoid legitimately, they need to take action. If they are below the threshold (which is unlikely for any house owners south of the Watford Gap) also fine.
fact - head in sand up arse about death just leaves a lot of trouble for those who WILL have to sort out the affairs. Even if you are going to be dancing on your parents' graves, you will still have to deal with their affairs so get the hassle minimise.

Why would people not feel jealous when some get handed down hundreds of thousands by virtue of luck, and want to avoid a bit of tax on this, while many other families and their children are going to food banks and living in poverty

Re the wine point. I think if you gave a substantial gift with monetary value that needs to be declared, and if it falls within 7 years you may need to pay IT on it. Might be wrong though.

I would be far more relaxed about inheritance tax if I thought Governments spent taxpayers' money wisely. But often they don't. They piss it up the wall on rubbish computer systems that have to be scrapped, on interminable red tape and form filling, on illegal wars etc. By contrast, I know my hardworking children will use it wisely, my disabled grandchild will benefit enormously in terms of his future security (incidentally thereby saving the Government thousands in benefits) and the charities I have chosen to give money to are ones that I have researched closely so I know they help people in need directly.

Governments already tax what we earn, tax what we spend, tax what we save (except for ISAs). Not satisfied with that they tax us for dying. I recently retired and didn't work 60+ hours a week for 45+ years for the Government to piss my hard earned savings up the wall. Family first, charities second, Government last.

I'm not jealous. I stand to beneift from an inheritance. The only thing against IHT that I can see is that I don't believe that the government wouldn't waste the money.

What bothers me more though is that we'll soon be at the point where your chances of owning your own home (not the be all and end all admitedly) will be predertimined by whether or not your parents owned their home. That to me seems like a massive step backwards for society. A return to feudelism.

Not trusting government to spend money is an argument against tax, not IHT in particular.

"If they are below the threshold (which is unlikely for any house owners south of the Watford Gap) also fine."

That isn't quite true Special. For a couple the limit is effectively £650,000. For a lot of homeowners, even in expensive areas, that will pretty much cover it. Most of us have very few assets bar the house.

As an aside, I think a far bigger issue for my parent's generation (in their 60s) is going to be all equity in the house being used up in care costs before the last of the couple dies.

Binky That's true. I for one would be much more sanguine about ALL tax if I felt that it was being spent wisely.

Penguins, except a significant proportion of the generations coming through are those where divorce is more common and they didn't necessarily get married in the first place. If you don't look to do any future planning, you may not even know that you'd benefit to the tune of £130k in tax just by getting married.

Agreed -but Special said 'any' so I was just pointing out a big chunk of people where it still tends not to be an issue.

oops, fair point. £650k it is which does cover a LOT more houses, even south of Watford.

as for spending all the inheritance on the care home - well, that's just how it is. Care isn't free.

Exactly. I just meant it is likely to make IHT academic for many.

Absolutely you should mention it or ask if they have taken advice. Someone worked hard for that and it has probably been subject to tax in multiple forms already. Inheritance tax is an abhorrent tax in my opinion. It is absolutely right to avoid paying more than is necessary.

Also - you may also want to search for a tax adviser (qualified) as well as looking at accountants

Before you talk to them, read up on powers of attorney. They're really important. Might be a good starting point for depressing but necessary planning.

Yes I would mention it, they may appreciate it. I know that my parents who are in their 60's have made significant provision so that it's unlikely there will be inheritance tax on what will be a significant estate. I don't know the details of it but I know it's all done and that all of the children have lasting power of attorney.

I'm absolutely with those who support inheritance tax. How is it worse to tax someone's unearned windfall than their hard-earned wages?

If you're inheriting over 325/650k, you WILL be rich. It doesn't matter how 'modest' your parents' house might have been when they bought it. That's a huge amount of money to receive in a lump sum.

And that much money is more than enough to cement your family's privilege for another generation or two.

I've genuinely yet to see an argument that even makes me doubt for a second that it's one of the fairest taxes going.

Plenty of people scrimp, save and lots of other cliches. It doesn't mean their children automatically get to be rich when they die.

its a tax on those who cant face tax planning really though

almost a voluntary tax

Former Chancellor of the Exchequer, Roy Jenkins, once said "Inheritance tax is a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue."