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Original poster

Anyone had the inheritance tax talk with a parent?

175 replies

TimeFlying · 03/04/2023 22:48

Who although understands about the tax the gov will collect, equally seems reluctant to deal with it?

My DF has been ‘careful’ with his money all his life. He’s isn’t naturally generous
Now he’s in his 90’s and is going to be over the IHT threshold. So he’s worrying about money but doing nowt about it.
I’ve listened to him and outlined his options including giving it to a charity. I’m the only person left in his immediate family.
he just doesn’t react or engage even tho he’s worried. I’m being as a patient as I can muster but I fear the gov is going to get a chunk of money which I and my family could really use right now.

i just needed to offload. I know I can’t change the person; I realise it’s his money. It’s frustrating that he just wont give anything away and never has.

OP posts:
Marchforward · 03/04/2023 22:51

Maybe for your own piece of mind you need to think of inheritance tax as him giving it away to the Nhs or education system.

PickAChew · 03/04/2023 22:54

Quite, @Marchforward

And for most of us, it's not even going to be an issue.

pastaandpesto · 03/04/2023 22:54

If you are the sole beneficiary of an inheritance that is over the IHT then you are still going to receive a considerable sum of money, irrespective of whether you attempt to avoid it?

And gently, if he is already in his 90s it is probably too late anyway because the 7 year rule will come into effect for anything he gifts to you now

MrsBennetsPoorNerves · 03/04/2023 22:55

No, I would never have that conversation with my parents. They have always believed in the importance of paying their taxes and contributing to wider society, so they will be more than happy for a chunk of their estate to end up going in taxes. And as I haven't earned the right to any of it personally, I would not attempt to persuade them to try to avoid that tax in any way.

FullBloom · 03/04/2023 22:55

Surely any plans to avoid IHT need to come from the giver, not the recipient? You shouldn't be trying to direct him in this.

Bewilderedandhurt · 03/04/2023 22:57

It's worth having a conversation about efficient use of tax allowances. At his age It's unlikely that full benefit could be had ad 7years needs to elapse from the time of transfer.
Nobody likes to pay tax so surely he'd rather less was paid on his passing.
Maybe you could ask to arrange for some external financial advice for him.

LeavesOnTrees · 03/04/2023 22:59

He needs to donate or give money 7 years before he dies or else it's still taxed

I'd say it's too late to do any iht avoidance.

It's a bit much to be eyeing up his money whilst he's still alive.

GingerAle1 · 03/04/2023 22:59

I understand
But is it the case that he is happy with that chunk going into the state?

Neither of us mentioned it to our parents, but when they mentioned it, a full discussion happened and they helped us out with various costs. It doesn't have to be big things, just paying for ordinary daily things is helpful and means the house value matters less. But it does depend on his view. Some say it's unearned money for the recipient.

I don't fully understand it and it might be that it comes in under but it depends what house prices are doing at the time.

KnickerlessParsons · 03/04/2023 23:04

Did your DM leave any money to you?
If DM left everything to your father or if it was jointly owned, he can use her IHT allowance too, effectively doubling his to £650k. You only pay the IHT on anything over that amount.

SirTarquin · 03/04/2023 23:09

It’s frustrating that he just wont give anything away and never has.

well why should he? It's his money and if he's alive and well, he maybe thinking that he may take a down turn and need to pay for full time care which is whoppingly expensive.

If however you mean he hasn't made a will at all, then you are right that he should do that.

As others have said, it's probably (odds and all) too late to make a clear gift because you will need him to live another 7 years which although possible is equally not possible.

MrsBennetsPoorNerves · 03/04/2023 23:13

Re being frustrated about him not giving anything away...I mean, it's a bit late for that, isn't it? He probably isn't going to change after a lifetime of not being very generous, but the fact is, he won't get to take any of it with him. So unless he somehow manages to burn through it before he dies, he will have to give it away eventually. The question is whether that will be to the state, to you or to some other party such as a charity. You don't really get to choose which of those it is going to be.

mosiacmaker · 03/04/2023 23:18

I know what you mean OP. My DP’s family are really on top of IHT and give large chunks to family now for mortgage etc whereas mine don’t seem to be very bothered about it at all. I would like them to put property in a trust but It’s not something I’ve felt comfortable about bringing up though and I don’t think you really can. It’s frustrating though.

Scepticalwotsits · 03/04/2023 23:22

Parent has thag talk with me as they were looking to protect their cash.

my view it’s your generation trying to avoid paying your fair share that results in a lack of funds and services to others. There is enough assets they own to provide more than well enough so trying to save a few bits here and there just seems wrong

Beenaboutabit · 03/04/2023 23:25

Nobody likes to pay tax so surely he'd rather less was paid on his passing.

Not true - I am a higher tax payer (in Scotland) and feel I’m privileged to be one. I like paying tax in that I feel it’s a good thing. I’m not alone. I have friends who feel the same way (and a few who resent it) but the more people avoid taxes, the shittier this country becomes. OP’s father may also consider IHT to be for the social good. For a single person with property it’s £500k before IHT kicks in. For the surviving spouse it’s £1m before IHT starts.

FragranceFree · 03/04/2023 23:26

Unless he will live until 97 its a bit too late (though I believe it's paid on a pro rata basis).

MajesticWhine · 03/04/2023 23:28

If he's not bothered about it going to HMRC then there's not much you can do. If you are the main one to inherit you should still get a bit.
He could give you a tax fee gift of £3000 if he has some cash handy. Have you tried asking him outright if you're struggling?
Luckily DM has been quite proactive on this and set up a trust for my DC. My PILS on the other hand seem convinced we are going to rob them and turn them out onto the streets if you so much as raise it, so it's going to be a big fat mess to sort out when they pass.

CaptionChaos · 03/04/2023 23:34

Inheritance tax tapers, so each extra year after a gift, the inheritance tax due decreases to zero at 7 years.
We have a similar problem to a pp, my parents under the threshold, totally understand the implications. My in-laws think at 86 they are immortal, have everything tied up in difficult to liquidate assets that take up too much head space. The family will pay in tax enough to put all the grandchildren through university. My DD received £50 for her 18th so no windfalls, they'll be stitching pockets on their shrouds.

CosyFanTucci · 03/04/2023 23:39

There are a lot of variables that will affect the OP's situation. If much of the estate is property and if one parent's share went to the other then (I think - I'm not a tax solicitor), the joint allowance could be £1m if passed to a child. The OP could also look at trusts. But absolutely needs a professional to advise. And I agree about wanting as little as possible to go this shameful government, to be spent on private jets and sending refugees to Rwanda etc.

SheilaFentiman · 03/04/2023 23:46

It doesn’t taper in a straight line for 7 years, there’s no relief for the first 3 years.

More of an issue with a gift might be deprivation of assets, if DF needs care and the gift means that social services are expected to contribute.

however, the iht exempt gift level of £3k is worth looking at for annual gifts.

Boomboom22 · 03/04/2023 23:51

But you only pay over 1mill so what is the issue here exactly? You could do with more than the 500k or 1 mill tax free plus the extra without paying? Or do you just not understand how it works? Because this doesn't make sense? Or do you think he's not leaving any to you at all?

SirTarquin · 04/04/2023 00:14

But you only pay over 1mill so what is the issue here exactly?

I don't think this is correct. If you are leaving to a spouse, it's effectively tax free. If you are leaving to others (assuming OP is talking about leaving to children here) the threshold (excluding leaving a house to a child which gives a raised threshold of £500,000) is £325,000. Everything above that is taxed at 40%.

40% is a very large amount to pay in tax.

See the example given here:

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

ExampleYour estate is worth £500,000 and your tax-free threshold is £325,000. The Inheritance Tax charged will be 40% of £175,000 (£500,000 minus £325,000)

How Inheritance Tax works: thresholds, rules and allowances

Inheritance Tax (IHT) is paid when a person's estate is worth more than £325,000 when they die - exemptions, passing on property. Sometimes known as death duties.

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

Boomboom22 · 04/04/2023 00:18

Well 325k then. Hardly small change is it? And 60% of the rest.

Boomboom22 · 04/04/2023 00:20

Many wc people struggle to get the money together to pay for their parents funeral. A bit of tax to pay for eg nhs, education, social care would be good. And it hits the wealthy not the workers who already pay loads.

Boomboom22 · 04/04/2023 00:21

In your example 405k of 500. Quite a lot no?

Boomboom22 · 04/04/2023 00:22

430k even

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