AIBU to think my DM needs to tell the lawyer about this?

[Apolloanddaphne]

I am actually a bit conflicted tbh.

DF died recently and i am going with DM to the solicitor today to go over his will. I know that in 2015 she and my DF gave 5 grandchildren £5000 each. This is way over their joint allowance and DF has not survived the required 7 years for this to be okay.

I have been encouraging her to be up front about this when we go but now i am wondering if we should not say anything. I think she is in a bit of a tizz about it all and doesn't want her GC to have to pay back money. But we don't want her to get into trouble as we are very law abiding citizens.

We need to tell them don't we?

I have no idea, but presumably your parents were married if so wouldn't the money have been a joint gift? Not sure if this helps or not.

I thought it would count as a joint gift surely, so as long as your DM survives to the 7 years it would be ok?

Sorry for your loss

Can your mum say she gave the money?

Who are the executors of the will? Is the estate worth over £325,000?

I could be wrong but I’m pretty sure if you end up being investigated by the tax man it’s the executors that will end up in the shit and get fined over this if it’s not declared - and possibly the grandkids for not declaring the gift for tax purposes.

But your mum isn't dead

I guess it’ll also depend if the £25k came out of a joint account, or one that was just in your dad’s name.

It was a joint gift from them both. I am assuming DF would be liable for half the amount which is still over the yearly gift allowance. My DM is the executor of the will along with me and my DB.

Declare it. Otherwise you risk massive fines and penalties. The solicitor will probably ask outright anyway.

I assume it came out of their joint account.

I think we explain it to the lawyer and she can tell us if any tax is liable on it.

It’s no concern because GM is still alive, so no need to mention it. But even if it were subject to IHT you were worried about:

“doesn't want her GC to have to pay back money.”

That’s not how IHT works. Any tax owed is paid out of the deceased’s estate. No money or taxes are paid by the recipient of the gift. In addition, there is a taper scale for years survived from 3 up to the 7 where it zeros out.

Can you repost to legal.? We are just guessing,. Sorry for your loss

Yes that makes sense about the IHT being paid out the estate.

Get this moved to legal so hopefully properly qualified people will see it.

It’s not over the 14/15 gift allowance. Each individual can give another individual £3k per year. GM and GF gave a joint gift of £5k to each GC. That means GM gave £2.5k and GF gave £2.5k.

If they had not given those GCs any gift the year before, you can even carry forward 1yr of gift allowance and give an individual up to £6k.

It wasn’t a £25k gift. It was ten £2.5k gifts.

Sure you can tell the lawyer, but no IHT should be owed.
Your GM doesn’t need to worry.

We had exactly this situation when my mother died 3 years after giving each child 20k. No-one has to pay any of their gift back, as a pp says, any tax owing on the gift comes out of the deceased persons estate, but there might not be any tax owing anyway, so speak to your solicitor. Don't try and hide it.

She needs to tell him. As pp it's within the gift allowance and there won't be any tax due. If she lies she'll face penalties and interest.

I assumed the gift allowance was £3000 in total not for each person they gifted to. Am I wrong on this?

The gifts would use up the nil rate band first if not exempt. That’s why there would be nothing for the grandchildren to pay as long as the gifts fall within the nil rate band.

Taper Relief wouldn’t apply if the gift falls within the nil rate band. Taper relief only applies where tax is due.

I’d mention it in case there are other gifts/details we don’t know about as we can’t advise appropriately without knowing more.

You’re right. It’s not £3,000 per person.

its each person

Depending on the size of the estate depends what happens.

Presuming not a huge estate or tiny. You mum will inherit your father’s IHT allowance minus his share of the gift 5*£2,500. Grandchildren won’t be liable for tax atm. It just means that when your mum died (cheerful). There will be less IHT limit because you’ve already used some up.

Not wrong OP.

3k is an annual aggregate gift exemption, with one year carry forward if unused.

So the gifts would be aggregated (25k), less the exemption (19k) to give you what is a chargeable gift at death.

Assuming he had his nil rate band allowance, this would be allocated to these gifts first before the Estate.

So essentially, unless the NRB is gone (due to other earlier gifts, or chargeable lifetime transfers) the grandchildren will not have to pay any IHT.

Assuming worst case scenario, each child has received a chargeable gift of 1.9k.

IHT @ 40% is £760.

Credit for taper relief (five years since gift) is 60%.

Maximum each grandchild is due to pay in IHT is £304.

They won't need to pay it back, it will just be taken into account when paying IHT.

(Not my area of expertise). IHT forms are all online with instructions.