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?

And as you're talking about assets you bought with your own hard work dora, that's a million miles from this situation.

I cannot imagine that anyone who thinks it is unethical to do IHT planning has many assets themselves.

ANYONE WHO THINKS REDISTRIBUTION OF WEALTH IS IMPORTANT IS PROBABLY ALL POOR.

Banana.

It is still the Dad's money legally to with as he wishes. Nothing anyone can do to influence that either is there in law?

Just out of interest, what certain things could he do to avoid it? As someone else has alluded to, the new residence relief will help.

Most other schemes require 7 years life which judging by you having to care for him sounds unlikely?

IHT is an incredibly fair way to redistribute wealth and good on your dad. Keeping wealth within families hinders social mobility imo.

I'm absolutely stinking rich btw, literally rolling in money. Just in case anyone thinks that my opinion is not valid

IHT planning is part of my day-job, and yes, it's an absolute minefield dealing with the feelings and emotions of those concerned - probably the hardest part of the job as you have to walk on eggshells most of the time. Time and time again, the elder family members just won't listen to reason and won't do even the simplest/safest of IHT planning options. Worse still are those who won't even write a bloody will and leave their nearest and dearest with massive headaches, family disputes etc., as dealing with an intestate estate is not pleasant, however simple - it has the potential to tear families apart.

I've had the misfortune of having to work for many elderly people who have very controlling natures and are almost blackmailing their children/grandchildren with the dangling of their inheritances. Some people have made a will and have done IHT planning but pretend they havn't. The games some of these old codgers play is unreal!

I wouldn't mind so much if they really had worked their arses off to make the money, but most have either inherited it themselves or have benefitted from house price inflation, endowment payments, high pensions, free uni education, no student loans, etc that their children/grandchildren won't benefit from, yet they seem to delight in pulling the rug from under their own nearest and dearest. Crazy!

So what do you expect him to do. Hand it over to you and hope he lives at least 7 years from then?
That makes it yours and not his.
Gifting out also makes it not his.
IHT is there. I've been in the same position. Stop being so greedy and expectant. Yabu

How the hell is getting 60% of an estate worth greater than 1 million pounds getting the rug pulled? As a child you are not automatically entitled to your parents assets. Inheritance is a privilege.

BrandNewHouse:
Independently of legality, tax avoidance is often as morally reprehensible as tax evasion, . Not always; but in this case, it is.

Your father is a better person than you, it seems. It won't make you happy, being so grasping. You'll be better off if you work hard at gaining a social conscience. (I suppose we'd better not hold our breath waiting on this, though.)

" A complete load of rubbish. Particularly that her father is a better person than her. He patently isn't when he cannot take part in the adult activity of planning for his own demise. She is the better person here. "

I'm sorry, you're just mistaken about this. Lots of people are similarly mistaken, it's true, but that's no justification. You'll be a better person if you develop a social conscience and pay your societal dues, including taxes (but not restricted thereto).

" How much money do you volunteer to HMRC every year to signal your virtue. "

I pay my taxes and eschew tax avoidance schemes, albeit that many such are - and have been - available, as is the way of the world. I also try to vote for more taxes and more communal provision of public goods on the back of such.

Most of that engages a different point from the one I was making, however: that sort of thing makes us communally better off. (It's obvious we're better off with publicly-funded health care, education and general infrastructure, no? That's a simple utilitarian calculation.)

My point wasn't about signalling virtue; it was, rather, that being virtuous, in this way as in others, makes you a better, happier, person.

" Her dad is a fool. "
Nope. It's you, and others like you, who are foolish. I'm entitled to feel sorry for you. (As I do, most of the time; sometimes I get annoyed at how your lack of understanding affects others less fortunate than you (or me), but, hey, 'twas ever thus I suppose. Some progress has been made, I guess.)

I'm aware this will seem condescending. The older I get, though, the more I realise sometimes it's just worth telling the truth.

Just out of interest, what certain things could he do to avoid it?

Options vary from the very simplest such as: Over a number of years, the relative small annual allowances can add up to substantial amounts, plus IHT free gifts for weddings, etc., plus "gifts out of income". Over say 10 years, you can very easily remove tens of thousands from an estate, saving thousands in IHT.

For the more adventurous, they can buy a business (or shares in a business) - they don't need to run it themselves - business assets are exempt from IHT! Or they could borrow money to spend - the borrowings would come off the estate.

9toenails Do you not have a pension then, if you eschew tax avoidance schemes?

I've told him i'd rather he went out and bought a Bentley or several round the world cruises and enjoy it now than leave it to the taxman

this is beyond ignorant, greedy and unreasonable. if you were my child and had developed that attitude i wouldn't leave you a bloody penny. hope you don't find yourself in need of the police or, say, the NHS anytime soon

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.

That would be my first thought too.

YANBU. £250k could be enjoyed by the family and every time they moved or spent it the state would get a share through taxes anyway.

It's strange that if he so determined to let that amount of money go somewhere other than the family, that he doesn't give it to charity now.

Was he always like this or is it out of character and do you think his mind is going a bit?

I'd be a bit miffed. But then my DP's fall into the category of "the state has had bloody enough out of me, they're getting nowt else".

kazzy your job sounds interesting, what do you do?

Look, if he bought a Bentley and a few round the world cruises he'd have a bloody good time and the state would get loads in all the various taxes paid to buy those items. Everyone's a winner!

It is still the Dad's money legally to with as he wishes. Nothing anyone can do to influence that either is there in law?

Legally, obviously. But this clearly isn't a thread about whether OP has any legal remedy. It's about the moral arguments.

Now I can quite understand thinking OP is BU, but if she is, because these circumstances are so different it's not really got anything to do with your decisions about assets you acquired from your own hard graft.

Also I've just noticed the bit about OP preferring her dad to spunk it all up a wall than pay IHT, and that definitely is unreasonable. It's arguably fine to want a share in familial wealth, especially if it wasn't earned by the current holder and was left with the wish and assumption it would be passed down (and OPs GPs clearly wanted to minimise IHT). It's a complete logic fail to accept that the money is her father's to do with as he wishes to the extent that you'd be fine with him dissipating it, but decide IHT is beyond the pale. Either it's all his to spend on whatever he wants, be that tax or stupid cars, or it's not and he should pass it down. Pick one.

MrsDustyBusty

I cannot imagine that anyone who thinks it is unethical to do IHT planning has many assets themselves.

"ANYONE WHO THINKS REDISTRIBUTION OF WEALTH IS IMPORTANT IS PROBABLY ALL POOR."

' Probably ', perhaps, but not actually. I'm far from being poor and I think redistribution of wealth is important. One of us is enough to show you your mistake, but actually I know lots of relatively well-off people who think the same.

Etymology23

" 9toenails Do you not have a pension then, if you eschew tax avoidance schemes? "

Yes, that's a good point. And, in general, savings? (ISAs?)

How do you think I should deal with such matters, if I'm to be consistent? I've thought about it, obviously. I wonder what people think I ought to do, ethically speaking?

It's up to him really. Some people see it as their duty to put some of their wealth in th public purse, others don't. Options exist for both. Some people dodge tax by opening an isa. Others have normal accounts. It's his money, his priorities. Maybe having money has caused his issues in his life and thinks passeing on smaller amounts would be better for his kids. At the end of the day you can't do anything about it so forget about it and concentrate on making your own way in life

Brand New House.

Referring back to my fuck the beneficiaries statement. You are making so many assumptions about me!

How can you know what my circumstances are, why would you care? Are you envious or are you trying to make me feel bad. I dunno.

I am a bit older than most here I reckon, but still have fight in me!

Have done everything possible for family to see them on their way, they are doing well.

I am not going to leave them anything if I can help it, they will just want to kill me stone dead right now if so! Joking. They know they have been assisted emotionally, physically and financially for years.

It is my turn now. They accept that.

Is there something wrong with me saying that I can do what I like with my assets? Is there?

No wonder some people want their parents to croak and get the money.

Won't be happening my end anyway. But the gifts I gave during my life are ongoing. I want to see the results of my generosity whilst I'm alive. I won't see that when I am dead.

Have to live for 7 years for to keep the taxman away though!

9toenails

The government has lots of schemes that it WANTs people to use - putting money into pensions helps you plan for your future. I'd say it's really not unethical to use schemes like that. The same applies to ISAs.

And, to me, the same applies to a lot of tax planning you can in old age. Buying shares in business attracts a significant reduction in IHT (depending what you buy), and the government chooses to offer that to encourage people to invest. Investment in private companies attracts more relief, because the government wants people to have a way of passing down family businesses without them paying inheritance tax. The fact that these are government sanctioned makes them seem quite reasonable.

Then there are things like giving your assets away early. If it's a house, and you continue to live in it, then you'll still pay IHT as if you hadn't given it away. If it's something you don't need/use any more, then it's quite reasonable to give it away - just as you would at any other time in your life. You're likely to pay CGT on any large gifts, whereas you get an uplift in value if you passed those on upon death - it's a gamble. If you live in the UK, and follow the laws created by the government, it's up to you whether you tax plan efficiently or not. If we as society deem these laws unacceptable, they should be changed. Until then, I have no massive problem with it.

I certainly think that there are changes that could be made to inheritance tax laws, but I really think the primary moral issues re taxation tend to sit around off-shoring vs on-shoring of assets and income for individuals, and revenue and profit location for businesses. If you look at businesses like Amazon, they have HUGE management fees that mysteriously multiply up with profits and revenue, taking profits in the UK to extremely low levels, and shifting that profit to low-tax areas like Luxembourg and Jersey - to me, that's where the real problems lie.