Inheritance Tax AIBU?

[FrancisUnderwood]

NC for anonymity on this sensitive issue but long time lurker/poster.

Essentially, my DF has an estate worth just over 1mil. Not earned by himself but handed down through the family.
He has benefitted greatly from his own Parent's IHT planning genius and is now in a very fortunate and lucky position.
I have recently broached the subject of IHT planning for the family, going forward. With money comes responsibility etc... I have made it abundantly clear to him that this is not a conversation I relish having to have with him, and that i'm wholly aware it is now HIS money to do with as he wishes and that I'm in no way trying to get my hands on his money whatsoever, but I would really appreciate him trying to manage his estate in such a way that it minimises the 40% tax liability his children would have upon his passing.

His answer to this has been unbelievably flippant, he says 'Well that's just the way the country is' and 'everyone has to pay their taxes' whilst conveniently forgetting he has benefitted massively from careful planning on his Parents part. He says 'you'll be alright', which of course is true, but he could do certain things at no cost to himself which would in essence save his children £250,000 on his death, but won't.

I don't want to come across as if there is greed at play here, my family has led a hand to mouth existence and I simply understand the value of £250,000, which is more than a lifetime's income for most people, rather than being greedy for it.

I just can't reconcile in my head how he'd rather give a property to the taxman than plan ahead and hand it to his children.

I've tried to be as delicate and sensitive about this topic with him as I can and now our relationship seems to be disintegrating rapidly, we haven't spoken for a week.

This isn't about me 'taking his money' it's about planning ahead to avoid having to sell family property later. His attitude seems very much to be that 'I've got it and i'm keeping it'.

We've sought financial and legal advice together on the subject but he just doesn't want to do it.

I bend over backwards and have just given up 18m of my life to his care, and catering to his every need. I just feel kicked in the stomach.

AIBU to feel this way, or is he?

Case against high inheritance tax.

Francis is your primary concern that a house that has been in the family for generations will have to be sold? Are you an only child? If not won't it have to be sold anyway, or go to just one of the siblings leaving the other/s with token compensation or even with financial liability for the property the other child lives in? Surely that would be worse for the human family than selling the property?

Funnily enough my creepy old 80+ year old Dad has just gone out and brought himself a nifty little Mercedes Benz convertible 😂 Just what you need when you can hardly manage to get up from a normal chair.

I completely see where you are coming from OP but I wonder if it's more about your DH not wanting to talk or think about his death rather than him actively not caring about where his money goes. Even if he doesn't appear it it might be that he is scared of dying and getting old and just want to ignore it. I don't think that's unusual.

I'm like you in that I hate to see money go to the tax man if there are perfectly honest ways of minimising your liabilities. My DH and I are only in our 50's but we are already doing things to minimise any potential IHT - We pay thousands and thousands in tax every year and don't feel any moral duty to give any extra money to the state that we can legally give to our children instead.

My siblings and I all delight in my Dads spendthrift ways. He's just booked himself a luxury holiday too. I'm happy with that but I would be a bit 'dissapointed' if he sat at home doing nothing and didn't want to do any estate planning.

There is not much you can do though. It's up to him and he has made it clear he doesn't want to do it. To continue to ask him about it would be really unfair and unkind.

Shrugs.

My parents are wealthy including from a couple of inheritances. As far as I know they haven't done any inheritance planning.

I never think about their money. My maternal grandmother lived to her late nineties, my mum was only mid 20s when I was born. With luck I'll be well into my seventies before I See a penny. And if mum and dad need care then it is amazing how quickly assets can be eroded.

If the money comes to you - great. If not, oh well. You will only pay inheritance tax if there is a decent sum to inherit so it is hardly a tax on the poor. It is a tax on money that you have not early and can never rely on getting (they may change their minds on their deathbeds and leave it all to the dog's home).

So you would be happy if he said "yes dd, you're right. It is silly me paying the taxmen more when there's people needing it more. So I'm sorting that. I'm also going to leave it to this charity which is very close to my heart and potentially help lots of people."

Aghhh what a terrible typo......my Dad isn't creepy he is CREAKY!!!

Could you suggest something like giving away 10% of the estate over the IHT threshold to charity in his will?

Bear in mind that if he was married and his wife left her entire estate to him he will have also inherited her tax free allowance, so £650k will be exempt from tax.

This would leave only the remaining £350k to be taxed at 40%, so the tax bill would be £140k, not £350k.

If he left £35k to charity then the remaining £315k would only be taxed at 36%, giving a tax bill of 113.4, which added to the amount left to charity is slightly less than 140k.

Remember also that he has to survive 7 years from any gift to remove the liability and also that business assets such as shares can often be more tax efficient if gifted at death due to business property relief.

Some of the views on this thread about tax being theft and about children who wouldn't support tax avoidance being disinherited are properly shocking...

"I personally believe that tax is theft"

If everyone thought like this and nobody paid for the police, I think you'd pretty quickly find that theft is theft.

IHT is a voluntary tax paid by those who distrust their family more than they distrust the Chancellor....

On one level YABU. Inherited wealth is one of the strongest drivers of social injustice in UK. It props up house prices and private schooling and reinforces the disconnect between wealth and work. UK IHT at 40% of everything over £650000 still leaves a pretty massive chunk for the family.

On the other YANBU. The only people who actually pay IHT are the midddle classes in SE England most of whose wealth is tied up in the family home. The super rich have everything in trusts and are not affected.

But probably academic as when Comrade Corbyn and Co are elected they will probably tax everything at 100% - with exceptions for MPs

I am sorry IHT is 40% of course so the amount would be 60k

OP another YANBU

I would try and have a deep and meaningful with your DF to really understand why. It maybe that he has some deep feelings about IHT. Maybe he feels it's the right thing to do? Maybe he could divert the tax saved by proper planning to a charity if it's about doing the right thing?

It is your DF money. He can spend it on cocaine and hookers, and whatever... there is nothing you can do about it.

Not saying that he would either, but you get the drift!

It is not family money until he decides that it is.

Stand back.

He is probably winding you up anyway, to see how grabby you might be! Watch the space and be the better person.

The taxman isn't a big baddie, stealing all people's money and keeping it for himself. He takes an agreed upon amount and it gets spent on important stuff like NHS, police, schools. It's not uncommon to think of paying taxes as 'a good thing'.

OP you can plan your IHT the way you like. You have to accept that DF has the right to do what he likes.

I'd love my parents to consider serious IHT planning, they have an estate quadruple your DFs. But it's none of my business. It's their money.

If he doesn't want to do it, he just doesn't. I would but out.

And anyway you can't be sure he doesn't end up with dementia for and all that money gets used up paying for care fees.

^ butt not but

I can understand exactly where you are coming from. But I think there comes a point where you just have to stop being it up and let him do as he pleases.

Today 18:14 donquixotedelamancha

"I personally believe that tax is theft"

If everyone thought like this and nobody paid for the police, I think you'd pretty quickly find that theft is theft.

^ THIS. IN SPADES.

Nothing is worth alienating him in the last years of his life, and if you keep pushing it he may end up giving the lot to Battersea dog's home.

Ooh had forgotten the home allowance mrsmad - does that transfer over like the personal one?

Trusts are not generally massively tax advantageous vehicles any more, there are punitive charges when putting money into a trust and IHT charges are paid every decade. Presumably there are ways around it for trusts but I haven't found many.

Well you say you'd be happy if he chose to spend it on cars and a cruise but he is choosing to give the government his money instead, it's not like it will be wasted (well, depending on what they do with it), it would be no different to giving it to a charity or something, or maybe he just wants to do things by the book.

You'll still receive a substantial amount so it's not like he doesn't care?

I wouldn't be impressed if my children started telling me what to do to ensure they didn't have to pay IHT. In fact I might say not to worry about it as they wouldn't be inheriting anything so wouldn't have a tax bill at all.

I think your approach is sensible. It can cause real hardship as well as inconvenience to find large sums of inheritance tax, at a time when you are bereaved. It can be very pressured.

Have you asked him why he doesn't want to plan? Try suggesting that it's great he is supporting public services, helping the government reduce its deficit, boosting the education pot with his money, pay for social care like care homes etc. He sounds like someone who may go off the idea.

@grannytomine

Is that you Mother?

I don't think either of you are being unreasonable. You can have your views on it, you can express those to him and be disappointed by his choices but ultimately it is his money.

I'd compare it to never getting a Christmas present off your father. He doesn't have to give you one but whether they admit it or not, many would be a bit put out by that.

I think you would be wrong to start using any "sticks" on this. You don't have to agree with his decision but you have to accept it.

I'd also add that there aren't any magic tricks with IHT planning. It is not just a case of doing a bit of paperwork and carrying on as before. He will have to give up control over some of his assets and it is fair enough for him to not want to do that.