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?

Ety
The new transferable main residence allowance, which comes into effect in April 2017, will increase the amount that can be passed on tax free by £100,000 per person in April 2017 to £175,000 per person by 2020/21.

This is in addition to the main nil-rate band. It will effectively raise the IHT-free allowance to £500,000 per person. Where married couples jointly own a family home and want to leave this to their children, the total IHT exemption will be £1m.

I do not live in UK.

When my DF died he left an estate north of Imillion.

That went to Mum. Fine. It is now nearly all gone because of care fees for mum which we do not begrudge for a second.

Our inheritance has been used to make mother comfortable in a lovely place. I don't have any problem with that at all. That is what Dad wanted. We are talking many years now.

I would rather be independent and rely on my own resources to live a good life. And I can. I do not need an inheritance although it would be nice! But nothing is guaranteed in this life is it.

The threshold before inheritance tax kicks in is quite high.

In general, though, it's depressing to see people who can't see the connection between living in a free, safe society where the rule of law means you can actually inherit and paying tax.

Sadly, there's no tax on being unable to draw pretty clearly marked threads together.

Thank you! Hadn't realised it transferred like personal IHT allowances. That's going to massively decrease bills for a lot of those living in high priced areas.

YABU. It's up to him what he does with his money, and if he feels that paying some of it to the taxman to fund essential public services, good on him.

It's a shame more people don't think like that imo.

your dad sounds a bit me me me but thank god he'll end up paying inheritance tax, this country needs all the tax it can get

If he bought a Bentley, that would still count as part of his estate...

@dumbledore345

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

You spoilt a really well argued post with a daft trope. There is lots you might disagree with in Corbyn's economic policies, but in reality the ones announced aren't that left wing compared to many countries. You'd be hard pressed to fair mindedly argue that he's much less competent than the current government.

YANBU at all.

I'm in a vaguely similar position, and my father is taking active IHT planning, by putting me onto property and (this year, I think) putting my children on too. What's left will be divided between me and my children so that there shouldn't be any tax to pay.

I genuinely feel that IHT is a voluntary tax paid by people who lack foresight or dislike their children. I am in favour of higher taxes in nearly all other regards, but taxing the shit out of small estates like the one you describe (and 1m is a relatively small estate - it would just about buy you a 3 bedroom flat, but not a house, where I live in London) is wrong. I am all for taxing the superrich, but forcing people to sell modest family homes to pay this tax is ridiculous.

If you have assets, there is no reason not to put your affairs in order.

Tax evasion and tax avoidance are both morally wrong in my opinion, even if only one of them is legally wrong

Really? So if you had savings you wouldn't give them to your children while you were alive to save them paying an extra 40% on the part of the estate over the threashold. I live in an area where most people live in houses over the single person threashold and many live in houses that are valued over the married persons threashold so HMRC would take 40% of all our savings. I'd rather do some tax avoidance and give my DC my hard earned money now. (And yes we do record all gifts etc etc )

a few years of paying £1200 per week in care home fees will soon see off a huge chunk of it anyway. Be grateful for what you get - he might decide to leave it to the cats home.

His friend Benn didn't pay IHT.

That's going to massively decrease bills for a lot of those living in high priced areas

god the tories look after their own, dont they

YABU. You will still inherit a significant amount.

Taxes are used to fund schools, social care, the NHS and other public services. Without which we would all have a pretty dreadful standard of living.

And it's no more double taxation than any other tax is. I earn money and then pay tax on it. Today I bought petrol and included in the price is a pretty big chunk of tax. Which I paid for out of my net income. Tomorrow I will pay my hairdresser out of my taxed income, he will then pay tax on the money he earns. That's how the system works.

Ety , you are welcome
OP even if the worst should happen and your DF die tomorrow your iht tax bill would be £230 k on 1m.
I so hope your parents were not divorced because if not then your DM allowances can be used and you have little to worry about

I don't think you will change your father's mind on this, it sounds as though you have laboured the point and he simply isn't going to budge. All you can do is change your own outlook on the way the tax paid benefits the wider population- galling, I know, especially when he benefitted, but the resentment will make you unhappy.

It is reasonable to ask him to ensure that his financial affairs are in order so that you haven't got a huge mess to unravel, and that having to pay the IHT doesn't cause financial problems for you and your siblings.

Can I ask a question, following from my previous post about a hypothetical Bentley still being part of the estate? What counts as the estate? Is it major value items only or down to the last Ikea teaspoon?

I'm supportive for IHT on unearned or appreciated value on assets, but less so on something that's only worth its original purchase price. Not sure where I am making the distinction...

How's that the tories looking after there own? A modest 3 bed house in a city will be more than 500k, we're not talking about super rich. My relative for example worked in the NHS and as a fairly low earner but her house is worth quite a bit (and no she din't inherit anything).

We're not super rich, there was no private education for any of us, or titles or ponies or boaters. Only terraced houses and frankly, rough schooling.

Please don't assume i'm landed gentry. I'm just a normal, working class person trying to ensure what our family has worked hard for and paid taxes on, is maintained.

ssd I'm not a tory, I've just read about tax laws, but yes they do.

Making use of the available laws to avoid tax may be morally questionable, but ultimately it's the government's job to make sure that tax planning (legal, and entirely reasonable - anyone who has an ISA, LISA or pension tax plans) is clearly defined so the grey areas of "avoidance" are removed.

The tories have also done some interesting things with personal tax laws over the past few years - they brought the headline high earner rate down which got a lot of press, but then cut tax breaks for pension payments and other non-headline tax reducers for high earners.

YANBU, he seems like a bit of a rubbish father for not thinking of it himself. I'm not even thirty and I am already planning ahead to ensure that my children receive their full inheritance. But it is of course his estate and he is welcome to do as he wishes even if it makes him a hypocrite.

all these people talking about money earned by property, that's unearned income. Nobody was down a mine 24/7 digging out emeralds with a marshmallow- you already are benefiting from something nobody earned.

Suck it up and stop being selfish. (and I say this, as someone who stands to inherit considerable amounts, hopefully not for a long time though)

I'm loving the comments about how good it is that the father wants to pay the IHT.
Errrrrr no....had her father actually had morals he would have paid IHT on his inheritance!