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?

As he was apparently fine with IHT planning when it was him who was going to benefit, I understand why you'd feel pissed off. I'm very glad he's taking this course of action, because I'd rather the money go towards schools and hospitals than to you (no offence!). But that doesn't mean it wouldn't be galling that he's only concerned about HMRC getting a fair share when it means him not having to go without.

My dear love, my best friend in the world, died last year leaving a large pot. He gave up to 20% to his friends and family, some carefully charities and the rest to the tax man. It was what he wanted -to feel like he paid back to society and to fund those things we all need. I loved that. It's your mum's inheritance, not yours. I understand your very human emotion of frustration etc, but in the end unless you are literally destitute (in which case it's terrible of him) you need to leave well alone.

Sorry to say my late father lived in a million plus house, lived the high life and everyone (including me) thought he had done ever so well. When he died there was nothing. A massive equity release mortgage had totally been drawn down and the house was handed back to the lenders, all the current accounts were over drawn. my advice, lead your own life as the only one you can be sure of is you!!

Perhaps it isn't an "ethical" decision. Perhaps he's frightened of facing up to the end of his life and would rather ignore the topic of wills and planning.

I don't think you are being unreasonable, OP. Inheritance tax is a very touchy subject and I think your point has been missed by some. That your father inherited his wealth should, I'd have thought, instil in him some sort of responsibility to pass it down in as whole a part as is possible. I know I would.

My mother would kill to be able to leave an inheritance for DB and I! She would do it in as economically friendly way as possible. I also see how, after caring for your father long term, you would feel somewhat let down by his lackadaisical attitude to the formalities.

I'm not sure what the solution is, but maybe he will think about things differently in the future. In the meantime, for the sake of your relationship, talking to him about it again probably won't do you any good. I'd let it lie for that reason.

Tax pays for nhs, police, roads, schools... It buys civilisation.

BRandNewHouse - Whose to say your children and grandchildren wouldn't 'waste' it? Many do. I've seen it.

IHT tax allowance is now 325k plus 100 k for house increase each
if OP's mum was or is still married to her DF ie they were/are still married and have not divorced then the allowance for the 2 DPS will be used
therefore the IHT allowance will be 850k
this house increase allowance is increasing year on year to 2021 to 175 k
meaning the estate tax allowance by 2021 will be 1m before any tax needs to be paid if they were/are married and not divorced

Surely the whole point here is that he wanted to minimise his own contribution, but doesn't care enough to do so for his children. So it isn't an ethical standpoint, bit some sort of fucked up point he is making to his kids?

My dad has considerable sum too but he made it himself and is very cautious:

I wouldn't ever want to bring up inheritance as I'd much prefer him to be splashing the cash he has before he can't and make up for all the years he worked 18 hour days and was exhausted to look after us as children.

Yes the house will have to be sold to pay the inheritance tax bill but there's no way any of us children can afford the upkeep on a house like that anyway.

Oh and by the way, I intend to leave nothing behind me either. I will spend, spend spend.

With a bit of a pot for emergencies. Has to be done. I worked for it, why anyone should expect me to be frugal for their benefit is beyond me.

But there will be always be the emergency (sorry fun and frolics) fund left anyway just in case I don't spend it all.

My family understands this.

I will deny myself nothing. Fuck the beneficiaries.

You know that tax pays for essential services right?

YANBU. It makes sense to do some financial planning to minimise the inheritance tax bill. The fact that he benefited from this but won't look at it now screams to me that there isn't much left... He may have taken some sort of equity release etc and not told you.

Sure he knows what he wants to do with HIS money.

my family has led a hand to mouth existence

The irony of the OP living hand to mouth probably because so many people avoided paying IHT on million pound estates, is now happy to stick it to other people now living hand to mouth just so she can get the lot.

Is this why people become more conservative as they get older?

The simplest form of 'IHT planning' is for your dh to gift the house to the dcs whilst he is alive and live for another 7 years after that. There may be stamp duty on that, not sure, but it will still be cheaper than IHT. No need for complicated tax schemes.

OP you are making the assumption that he is leaving his estate to his DC. Perhaps he is beqeathing everything to the National Trustor the local donkey sanctuary?

Bottom line is that it is HIS money do with as he wishes.

Surely the whole point here is that he wanted to minimise his own contribution, but doesn't care enough to do so for his children.

Pretty much. Basically he wants to be charitable/generous, whatever you want to call it, but with the effects felt by others rather than himself. Estate planning is ok when there's something in it for him, but not otherwise.

On a practical level, I'm glad when people do this as there's nobody to leave me £1 million whereas the society I'm part of would see some cumulative benefit from the extra money in the taxman's handbag. Looking only at the individuals concerned, leaves a nasty taste in the mouth.

I'd be interested to know whether this money was ever initially 'earned' by anyone or if it came out of the property Ponzi.

If the latter, that would explain why OP didn't have much growing up: grandparents ordinary earners but happened to buy their crappy little terrace in Notting Hill or wherever for £3.72 in 1975, cashed in, engaged in IHT planning to leave loads to OPs dad in recent years.

Is your DF always this selfish and entitled?

Sorry but I am on your side. It is his duty as a parent to maximise his dcs' inheritance, the same way his parents did for him.

I cannot imagine that anyone who thinks it is unethical to do IHT planning has many assets themselves. 40% is crazy daylight robbery.

BrandNewHouse.

How is that? Can you elaborate please.

I'm talking about my own assets accumulated through hard work and graft, not inherited from anyone just for the record!