To think that parents cannot leave money to severely disabled offspring free of IHT

[Noras]

Frankly I have been quite upset about farmers kicking up a fuss about IHT when they can transfer 3 million pounds of wealth IHT free and after that it only costs 20% which can be paid over a decade interest free.

As a parent of a disabled adult child I can only transfer one million pounds like anyone else and any unpaid IHT has to be paid over 10 years with 7% interest due.

We have other kids and can’t exclude them from our wills so that eats into the IHT allowance.

My son will struggle to work in any form of paid job.

I was discussing his placement in supported living with a social worker yesterday as a pretty likely destination

His life will inevitably be one of benefits eg universal credit and PIP

We have left % more to him due to his profound needs.

Our combined estate will face IHT charges especially with the fiscal drag.

So through no fault of my son he will live in relative poverty except for what is left after IHT into a vulnerable persons trust.

My son is used to nicer things eg holidays/ clothes etc and has some awareness of his current nicer life style even if he is not that driven by material things.

We would have to deprive ourselves of a decent retirement to ensure he is decently provided for,

I am heart broken to have given birth to someone who will live in relative poverty assuming he has a long life and the monies inherited have to cover say 45/50 years.

I am not the only parent waking up at 3am in fear of their kid’s future it’s a well known thing about parents of kids with disability.

AIBU to think that the Government should allow an IHT allowance for dependants who are classed as high needs eg PIP high or mid levels eg not really able to live independently etc? I can’t believe that they make no allowance in IHT terms for the disabled. As it is his care and needs have been an additional expense to us throughout his life eg 1:1 swimming lessons ,Ed Psych reports, SALT, private OT , personal trainers etc. This always exceeds disability benefits.

Its the living relatives who pay it and I’m sure they could put it to better use for their future and their own children’s’ future or do you subscribe to the current government’s view that we should all have nothing and be happy with that ? The assets belong to the family , not to a government.

As I understand it, the OP has other kids who will also share in the inheritance, but I get your point about the million quid.

However, you are way out of touch with what it's like living as a disabled person on benefits. Benefits are really very low when you consider that on average a disabled person needs an additional £975 pay month to have the same standard of living as a non-disabled person (2023 figures - much more now). That's an average so it'll be considerably more for severely disabled people. Consider wheelchair users, for example. Normally the NHS will only cover the cost of a basic wheelchair if you need to use it in your home. Many people need a powered chair which they can't use in their homes. The cost of a powered chair which can cope with more than just shopping centre terrain can easily cost £12000, which the disabled person has to self-fund.

Benefits are intended to cover the bear minimum, but for many disabled people they don't even cover that. Add to that the fact that benefits are regularly reviewed so you live with the very really fear that at any time the plug could be pulled and you will have no funding without an ability to earn a living (bear in mind that 75% of people denied PIP have it overturned by tribunal, so they were denied vital benefits to rich they were actually entitled because of their disability, and that legal process typically takes over a year).

A disproportionate number of people on social housing waiting lists are disabled people who are unable (not unwilling!) to work for a living but there is a desperate shortage of social housing so they have to rely on often substandard, overpriced private rented accommodation. Housing benefit generally covers no more than about half the average monthly cost of private rented accommodation. The rest has to be paid from the benefits which are intended to cover the additional expenditure required by the disability.

You're quite blasé about benefits and disabled people, but you don't seem to have a grasp of the living hell that relying on benefits is, over and above the hell of living with disability.

I find your last paragraph particularly disturbing. Disabled people don't choose to be disabled. Why should they be forced to live a life of abject poverty? Why shouldn't they have enough to live on to be able to afford the occasional meal out or even the odd weekend/week away? This would not be scrounging as your last paragraph implies - it would be a civilised way to treat the most vulnerable in a civilised country. Our taxes are used for all sorts of things - why not to enable the most vulnerable to have a reasonable (not luxury) standard of living? Don't forget that many disabled folk become disabled after paying a lifetime of taxes themselves.

I really think you should reevaluate your views on benefits and the disabled. You never know - tomorrow it could be you!

The IHT is paid from the estate though, whenever it's paid. It amounts to the same thing...

Help me understand this argument about farmers being asset rich and cash poor. IHT isn't due until they sell the richness of their assets, so how is it relevant that they're cash poor if no IHT is due from that cash?

IHT is due within six months of death unless you’re a farmer when it can be paid over ten years.

It isn’t. It’s paid by the estate of the decreased.

Please do look at trusts. Some supported living options are only available to people who are in receipt of housing benefit. If he isn't eligible his care and support options may be reduced.

The thing is, some of us do have a clue what it’s like to have a severely disabled child, and still disagree. I do have a “fucking clue how hard it is,” and what it’s like to worry about what will be available to them once we’re gone.

But - there is no way I’d be claiming he was being forced into poverty by having to pay a tax that is due on a large sum of money, or suggesting he should still get means tested benefits with that money available to him.

We claim what we need, and nothing more. I still would not be comfortable claiming public funds while he had £300k in the bank.

He is disabled, that is challenging, but that doesn’t make him or us a charity.

There is a provision for disabled people, infact there are benefits that are only available to disabled people or there carers. Benefits for disabled people are over and above able bodied for this reason.
But the fact you want your child to have th3 opportunity to go on holidays Isn't societies burden, that is yours.

If you want toensure your adult child lives a financially comfortable life it's for you to provide, provide them with additional money now while you are alive that can be saved and used for their later life. As others have said IHT is largely avoidable, speak to an accountant.

Yes, of course - been along day and I'm tired! 🤦‍♀️💤🛌

The reality is there should be no inheritance tax. I cannot comprehend this at all.

OK but what/who should we tax instead to make up the shortfall? Or rather what should we cut?

Some of the replies on here clearly have absolutely no idea how expensive being disabled can be! £1 million sounds great, but if you are paying for care that can be gone in a jiffy. And if the OP is catering for her son, she WILL be saving the state money.

For everyone talking about life insurance- well yes! But if the OP plans on living into her 70s then that isn’t going to apply, obviously! OP I am the sibling in your scenario. At present I stand to inherit substantially, and will then immediately have my sibling live with me. I will need to give up working. My sibling can never work, and never have any money to their name due to substantial vulnerabilities.

One thing that we didn’t cater enough for is my parent’s care costs. This is looking like it will be substantial and they will be fully liable for it (for now). If your child lives with you, one way of protecting that money, is to have it in your property, as when calculating care costs the house is discarded if still required by a dependent (which your son would be).

So you think it’s fair people being taxed effectively twice?

It’s not double taxation. The vast majority of IHT liability is because of property inflation, if your house is worth ££££ more than you paid for it that money has never been taxed.

It should be equal rules for all

The vast majority sure but not all. Even so - inheritance tax was created so the aristocracy couldn’t pass on their land easily and most of the time had to break up their estate to pay the tax. Which I understand but is now outdated. If people have worked to accumulate some money to leave to their 2.5 kids so they can afford a property on their own there should be no tax on this. Add this to having a disabled child that needs more support no wonder the OP worries and doesn’t think it fair. I would too. Whilst I understand the argument it’s never been taxed in practice the disparity between housing prices and income have drastically increased and this would be a way to re balance that for the next generation.

Umm… care to expand?

As others have said, it's mostly due to unearned property price inflation. And regardless of that we need to raise revenue. What do you propose we tax or cut to compensate if you feel it's unfair?

But how do you pay it without selling land, which will make your farm smaller and in most cases unviable.
Farmers may have millions in assets, but make very small profits if any. There is no cash sitting about to pay the inheritance tax…so land will be sold. To carbon offsetting, green washing, overseas investors, maybe even the government itself if you can’t pay the bill.

So I think it’s like this. Mid sized farms make about 1% profit. So farm worth £1.1milliob So yearly it’s 11,000 profit. Effectively wages for farmer and family working on it. therefore asset rich cash poor. The profits isn’t enough to save any.

IHT due would be 200k. Obviously if you are only making 11k a year you can’t pay that - now or over 10 years. If you make 11 k but owe 20k a year….

you would need to sel enough of the farm to pay the bill. Then if you were only making 11k a year - a smaller farm isn’t going to make squat so you have to sell everything. Farm is gone. A way of life dies. Country side dies.

on the flip side if a parent dies and leaves you 1 million. You will pay your IHT and be considerably more well off.

something like that… I think…

is he going to outlive both parents by 50 years?

And as I have said this is an outdated law that was created to prevent the aristocracy to continue to hold on to the land. It’s not my job to come up with solutions. That’s the job of politicians and leaders - that’s what your taxes pays - solutions for the cost of living. What I do know is many other countries (such as Canada, Australia, New Zealand, Portugal, Singapore) don’t have this tax and manage. There are many reforms required in the UK tax system in my opinion - this being one of them.

Yes, although if a farm is owned by a married couple their family get a £3 million allowance.