parents funeral fund

[Soozle50]

My husband has been given a building society chq from his father for £15,000 along with a quote from a funeral director for both parents funerals. They are both in their nineties and although live in their own home and are sound mentally they are now quite frail, my father in law is now in end of life kidney failure. I am asking for advice as to where to put the money, bearing in mind in my father in laws conditions his passing could be anytime and sooner rather than later sadly. Im aware of the inheritance implications that he would need to be alive for 7 years after he passes this money over, he has written a letter that the money is intended for funeral expenses, whether HMRC take this letter into account is irrelevant, any inheritance tax will be paid from his estate. Its now that we are stumped, do we just put it into a basic non interest bearing bank account for easy access when the time comes? Will we be liable for tax until its used? My husband is self employed, how would this affect his tax bill? I apologise for the long post this is my first! :-)

It might be worth finding out if the funeral director has a pre-payment scheme. Then it can all be sorted now, and put out of everyone's mind.

Friends of my DM has paid upfront. Check your local directors online.

My mother paid for her funeral up front. I tried to stop her because I didn't want to think about it, but when the time came it was such a relief that it was all done.

My mum would thoroughly recommend the Co-Op.

It would be better to prepurchase funerals for them both - I think all the FDs do them, and it would be a good opportunity to ask his parents what they will want.

I guess that a plan would be £3.5 - 4.5k each depending on exactly what they would want.

There was a program on the other night about saving money on funerals , the cop was quite expensive and the program recommended that people shop around for what they wanted and get several quotes from local companies. Apparently you can order coffins online these days ! I am sorry that i can't remember what the program was called but it was on Monday night.

As everyone else has said, buy a pre paid funeral. Every funeral director does them.

It is a huge relief for all concerned and makes it v easy when you come to organize the funeral.

Prior to retirement I worked for many years as a visiting officer for Dwp. The issue of the 'pot saved for funerals' is notoriously a thorny one. Whilst it is still in cash and not actually in a prepaid funeral fund, sadly it is counted as capital in entirety for whoever has the money in their possession. Where pensioners are concerned capital over 10k is taken into account for pension credit and for non pensioners it is counted over 3 k for means tested benefits like housing benefit...(pm me if you want chapter and verse on capital allowances !) .. So, without a doubt, OP I would add my voice to all the others and pre-pay. It makes sense anyway, sadly it is not one of those expenses any of us can avoid.

Give it back to him and take him to the funeral director and get a pre paid plan.

I don't understand why he has given a cheque in your name/s when he wants you to spend it on something he needs, this isn't money for you, it's not an inheritance or gift, he's just asking you to sort out some purchase for him isn't he? (like dp's dad is always sending him money to buy stuff on Amazon for him because he doesn't have the Internets).

There's no point putting this money in a bank accoutn in your name, it's not your money.

But, if you do, no, it won't affect your DP tax, he doesn't need to report it - there is no tax on gifts per se (only, as you have said, if the donor dies within 7 years they are taken into account in the whole estate for IHT purposes).

You are quite right to worry about inheritance tax. Normally funeral expenses are paid from the estate of the deceased and are therefore deducted from the value of the estate before tax is calculated but done this way you could have to pay tax on this sum. Does your FIL have enough marbles to explain why he wants this?