Large gifts to adult DC - what's enough?

[Loadedbydeath]

Disclaimer: yes, we have spare money. No we're not stealth or otherwise boasting. Yes it's sad that a lot of people are struggling and we've given money there too.
But wondering how much, proportionately, it's reasonable to give adult DC under the 300k each and no tax if you survive 7 years. So far they've had between them about a third of what we have spare. DH is also leaving DS1 the bulk of his dc pension pot when he goes. There's a small trust for disabled DS2 from gran which leaves him mortgage/rent free.

But we both have reasonable pensions and no mortgage. Most people (85pc) don't actually ever need care costs so saving just for that seems OTT. In principle I could give them the same again and still have enough for a decent but not extravagant retirement. So, give the most possible now, or through inheritance?

We're not practically disagreeing but DH cares less what other people do than I do. Conscious some of our friends are pretty much ladling the lot out now and trusting to the family home to cover costs if needed.

Also conscious of the prevailing "greedy selfish rich boomers" discourse and that kids secretly think this: they've been grateful but not effusive, do you that's because they think badly of us? We actually offered more but they say they're OK. DS1 earns above average, child free. DS2 single.

If you have a big income u can give them regular gifts of whatever you like as long as it doesn't affect your lifestyle. These regular gifts are not counted towards IHT when you depart.

For example, if you had an annual income of 50k and gave £100 a month to each child (so £2400 per year) this would be fine.
If you only had the State pension as income and gave this amount from that income it would not fall outside your estate. (Even if you felt you could afford it because you had savings).

Why don't you have a conversation with your DC and see what they think? If they've already turned down your offer of more money and let you know they're fine, maybe they don't WANT your cash in which case you don't need to worry about giving them anything now.

Maybe they'd like to see you enjoy yourselves with your money. Maybe they don't want to feel beholden to you. Who knows, without you speaking to them?

This is not something you have to decide for them. Have an open, frank discussion and put forward the options as you see them, then allow your children to make any suggestions or hare any thoughts they have. Then go from there. You'll figure out what works best for all of you.

Speak to an independent financial advisor who will ensure that gifts are tax efficient for all parties. Look on trust pilot for decent ones. If you want to pm me I can recommend one

I think you need to pay for some advice then because you’ve completely misinterpreted the rules.

There's not a 300k rule - no idea what you're getting at there.

In terms of your actual question, why not I suppose if you think they would make better use of it than you.

I think what you might be trying to get at is:

1. If you die less than 7 years after a gift tax may be due.
2. This will be the case if the gift + estate is over the IHT threshold.
3. If the gifts themselves are worth over £325k (per person doing the giving) then the recipients may be obliged to pay the tax on these from what they have been given, rather than the money coming out the estate.
4. The oldest gifts would be the parts that the 0% rate would be applied to (i.e. the parts that would have paid the lowest tax under taper relief).

Is that right? That's certainly my reading of this HMRC page:

https://www.gov.uk/inheritance
-tax/gifts

I do think you need to rethink care costs - yes whilst not everyone needs residential care, the vast majority who live past 80 need some help - often gardening, cleaning, laundry/bed changing, shopping, taxis .... the state won't pay for any of these even if you have no money. And money buys you options etc staying in your home when the adult social worker says they will find residential because in home will cost too much.

I work with the elderly and most need help and many are paying as family can't or won't.

Be wary of possible Care Fees - it can happen to anyone. Giving away cash now could be seen as "deprivation of assets" as already mentioned.
A Local Authority will chase for every penny - 7 years is irrelevant.
I'm out of touch now, but 5 years ago MIL was paying >£1,000 p.w. for a Care Home; & 6 years ago DF was paying £700 p.w. for carers at his own home.

I think it can be hard to know how to respond appropriately. Too enthusiastic and you can seem money grabbing, not enthusiastic enough and you are ungrateful - not speaking from experience having not been gifted large sums, but I think it can be difficult to pitch it right and generally we’re not very open about money in this country so there could be an element of embarrassment.

not sure if this is of any help.
my dm, sold her home and gifted the sales to both myself and my brother home valued at 350K.
she in turn has moved into a lovely seniors apartment complex with every amenity known (pool, bowling alley, library, outdoor bbq, etc. managed front desk, housekeeping and optional meals).
she is fully able to pay for this with a tiny bit of left over each month.
i was extremely grateful and moved by the gesture and when i went to the bank was actually crying over this generosity. now how did i convey that, i wrote her a lovely card. i call her weekly, i visit her twice a year and spend time with her.
i did pass on the generosity and gifted 25K to each of my three children. who expressed their gratitude to me BUT i had asked them to express this to my mother their grandmother....ONE the eldest one did, the youngest and my dd still have NOT.
dm has suffered a stroke and most likely doesn't fully remember who has and has not thanked her fully BUT when i think of it, it does grate on me :(.
we're not focused on care home fees or taxes she still has 100K in savings and should my brother or myself need to pay we will cross that bridge when the time comes.

If they’re lacking in gratitude because they’ve decided your greedy boomers, give them nothing further.

You're^

What do the DC need
A lot of people are handing out the absolute most they can manage now because its the only way their DC will ever afford a home &family, as opposed to because they think its the best way to pass on value.

Surely it depends how hold you are?

I think you have done enough now and have been incredibly generous. You do run the risk of your child expecting money from you. You don't know what the future holds and I think you should hold onto as much of your money as you can now. At some point your son has to be standing on his own 2 feet just as you did. You would be doing him a disservice otherwise.

This

Grandkids? Trust for house deposit or similar?

I don’t understand your reference to the £300k rule either. My reading of the HMRC guidance is:-
If it is more than 7 years since the gift was given there is no IHT.
If you give away an aggregate of less than the IHT exemption limit of £325k in the 7 years before you die there is no IHT.
If you give away more than £325k in the 7 years before you die IHT is payable on the excess subject to taper relief where relevant.
https://www.gov.uk/inheritance-tax/gifts

I am not a tax expert and I know there are some IHT exemptions between spouses but I am assuming each spouse could give away the full exemption amount.

If still earning, consider maximising pensions and ensuring DC are nominated (which may be the case). Tax relief on way in and outwith estate for IHT.

Again, you could gift out of excess income; could invest in an investment bond and assign segments to children which may be tax efficient/ assign into trust etc. You would benefit from financial advice to avoid making mistakes unknowingly.

OP, I work in a business where I am regularly dealing with financial matters after a bereavement. Absolutely second the recommendation that the best place to be having these discussions is with your own solicitor or financial adviser.

But, as far as inheritance goes:

• By all means consider lifetime gifts. But consider first of all the needs of you and your spouse
• Be realistic about your likely care and other needs, as other posters have said these costs can be very significant
• Talk within the family about the position, needs and expectations. This might be sensible and equitable or might surface some difficulties. Best you know about the latter sooner rather than later however uncomfortable
• Keep your wills and pension expressions of wish up to date
• Consider putting lasting power of attorney in place well before you think you need one.
• Make sure your close family/executors know what pensions you have and where your will is.

I think you're confusing 3k and 300k! You can give up to 3k a year without it being treated as part of your estate for iht if you die within 7 years.