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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:
AFlockOfTigers · 04/04/2023 00:31

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)

It depends on the family set-up. If there's a decent size family house owned, and the OP's mother was married to, and left everything to, OP's DF, then the tax free allowance is very likely to be one million. It's a specific set-up, but a very common one.

saraclara · 04/04/2023 00:35

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.

That's correct. If I was being left more than a million pouds, I wouldn't be quibbling about some of it going to the public services.

I'd be embarrassed, frankly, to be so grabby that I'd have a conversation with a very old man about how he can make sure that I get that extra amount, because a million isn't enough for me.

saraclara · 04/04/2023 00:38

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%.

If you are widowed, you get your late spouse's allowance too. As a widow, if I died and my house was included in my estate, the threshold would be a million. Two people's allowance plus the house allowance.

greenspaces4peace · 04/04/2023 00:40

i'm not sure what your asking op.
the silent generation went through many hardships and generally are very frugal and tend to keep a small nest egg just in case (huge fear of running out due to the effects the great depression had on their parents).
i would not expect a large gift at this point as those that i know believe you will get it soon enough type mentality.
you don't mention your age but if your father is 90+ i suspect he fully expects you to be well on your feet and managing well at this point, not relying on him.
are you living beyond your means? the 90+ crowd i'm familiar with have very firm views on this.
i would approach this at the bank or with a trusted professional (where i live the banks have staff that discuss these things with their senior customers) and only gently counsel him.
i presume a will is in place?

RestingRulers · 04/04/2023 00:52

Even at age 90 might he still be worried about potential nursing home costs. It's not difficult to find nursing homes that cost over £75,000 a year.

He could potentially live it over a 100 so maybe he isn't being totally silly to hang on to his money.

Chippy1234 · 04/04/2023 07:50

All are right re the £1 m allowance providing the house is left to child in will and they also have their late wife’s will.

I have to comment though on the PP who states that the 90 plus crowd have very firm views of living beyond your means. I have personal experience with a number of very elderly relatives and they FULLY expect relatives to look after them, refuse to move to a more suitable place despite living in a place that hasn’t been looked after for years, refuse to look at technology including mobile phones and ring constantly with little queries that can wait until the next catch up. It’s not all of course but the majority over 90 are struggling to look after themselves without others stepping in.

EyesOnThePies · 04/04/2023 07:59

So what is it you want him to do?

Give you the allowed £3k p.a? Hand you his house and allow for 1/7th tapering per year?

Does he have your Mum’s share of allowance that brings the threshold to the potential 1m?

Maybe he will develop care needs that will bring his assets down to the threshold.

If so, just tell him it will all be OK and not to worry.

It sounds more as if you are wanting his money now.

Almahart · 04/04/2023 08:00

If he's not that bothered there's your answer. My boomer father who was by no means left wing refused to do any tax planning because he felt it was right to pay taxes and that no one actually deserves an inheritance. My sister and I still inherited a load of money we hadn't earned.

I do think you sound pretty grabby tbh

bellac11 · 04/04/2023 08:09

What is it you want to happen OP, are you asking him to give you money year on year and if so how much?

How much IHT would his estate be liable for in any case?

I think your questioning and expectations are inappropriate to be honest.

Neither me or my sister would dream of raising this, the estate will be liaible for whatever its liable for, the executor will address that at the time and whatevers left will be our inheritance.

Twiglets1 · 04/04/2023 08:11

My Dad gifted his flat to my sister and I about 15 years ago so we wouldn't have to pay IHT on it when he dies (will have to pay Capital Gains tax on the appreciation in value when we sell but that's at a lower rate).

We told our mum about it (they are seperated) but she didn't think it was a good idea to do the same thing and obviously we never pressured her in any way. Inheritance planning is sensible but some people don't like to do it because they don't trust their children enough (Dad had to trust us that we wouldn't sell it which we could have done as the legal owners) or they don't like to dwell on their own death.

Chasingsquirrels · 04/04/2023 08:14

We talk about it a lot, instigated by my dad. I'm an accountant, and he is interested in personal finances so all aware of the rules.
My mum is of the view that it won't be her paying the tax and she doesn't care.
My dad wants his estate to pay as little tax as possible.
They are still together!

While PPs are correct in that 93 is quite old, and the likelihood of surviving a further 7 years is small - it is also decreasing daily, so if he is going to do it then the sooner the better (as the saying goes, the best time to start a pension was 20 years ago, the next best time is today - or something like that).

But if he knows and understands the rules, and isn't comfortable divesting his wealth in order to mitigate the IHT, then there isn't a lot more to be done.

As as aside...
I had an interesting conversation last week with my dad when he was saying how things were tied up, and to gift more than they were doing they'd have to take out of ISAs and he didn't want to do that because of the tax efficiency.
I reiterated that it is their money and they can do whatever they want with it, and try to convince them to actually spend some - "Go on a cruise" is a common refrain 🤣.
I also pointed out 40% IHT on that money far outweighed the current tax advantages of the ISA at this point.
He is now talking about extracting funds when their fixed rate ISAs start to mature.

Twiglets1 · 04/04/2023 08:16

Just wanted to add @TimeFlying that I do undestand your frustration. Your father could be giving you tax free gifts that would be making your life a bit easier and without disadvantaging him. Instead he is choosing to bury his head in the sand about the fact that he will go over the IHT threshold so a lot of his inheritance will go on tax.
Fine if people choose to go that route because they are left wing but a shame to do it more out of ignorance & not wanting to think about it.

Chasingsquirrels · 04/04/2023 08:16

Twiglets1
My Dad gifted his flat to my sister and I about 15 years ago so we wouldn't have to pay IHT on it when he dies

Just in case you aren't aware, that only works if he doesn't retain an interest in it, i.e. isn't living in it or is paying a market rent if he is.

Twiglets1 · 04/04/2023 08:19

Chasingsquirrels · 04/04/2023 08:16

Twiglets1
My Dad gifted his flat to my sister and I about 15 years ago so we wouldn't have to pay IHT on it when he dies

Just in case you aren't aware, that only works if he doesn't retain an interest in it, i.e. isn't living in it or is paying a market rent if he is.

Thank you.

Without going into too many details which could be outing, we are aware of the rules and he has set it up so that he is sure it will work (got legal advice).

sorrynotathome · 04/04/2023 08:19

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.

Exactly this.

SheilaFentiman · 04/04/2023 08:20

Chasingsquirrels · 04/04/2023 08:16

Twiglets1
My Dad gifted his flat to my sister and I about 15 years ago so we wouldn't have to pay IHT on it when he dies

Just in case you aren't aware, that only works if he doesn't retain an interest in it, i.e. isn't living in it or is paying a market rent if he is.

This. Otherwise it is a gift with reservation.

Mindymomo · 04/04/2023 08:21

It’s so very hard. My friend and his brother are both Accountants and have talked and talked to their DM about inheritance tax and how much is going to have to paid from her very substantial fortune to no avail. She buys discounted food, cuts down on heating, lives in a run down massive house and will not spend anything on updating the house.

Chasingsquirrels · 04/04/2023 08:22

Twiglets1 · 04/04/2023 08:19

Thank you.

Without going into too many details which could be outing, we are aware of the rules and he has set it up so that he is sure it will work (got legal advice).

Show quote history

👍__

Twiglets1 · 04/04/2023 08:24

@SheilaFentiman see my message to @Chasingsquirrels above. We are aware of the rules and it has been set up to stay within them. Just don't want to go into too may details on Mumsnet. My post was more to agree with the OP that some parents are very invested in forward tax planning re IHT but others not at all, and she has my sympathy that her Dad falls into the latter camp.

SheilaFentiman · 04/04/2023 08:26

@Twiglets1 thanks

my parents did some planning, but then didn’t want to do more as they got older. It may just be beyond your dad now, OP - not intellectually, but energy level wise.

massivenamechnage · 04/04/2023 08:29

Twiglets1 · 04/04/2023 08:11

My Dad gifted his flat to my sister and I about 15 years ago so we wouldn't have to pay IHT on it when he dies (will have to pay Capital Gains tax on the appreciation in value when we sell but that's at a lower rate).

We told our mum about it (they are seperated) but she didn't think it was a good idea to do the same thing and obviously we never pressured her in any way. Inheritance planning is sensible but some people don't like to do it because they don't trust their children enough (Dad had to trust us that we wouldn't sell it which we could have done as the legal owners) or they don't like to dwell on their own death.

Why do you think CGT is at the lower rate?

SheilaFentiman · 04/04/2023 08:33

massivenamechnage · 04/04/2023 08:29

Why do you think CGT is at the lower rate?

Show quote history

CGT is a lower rate than IHT.

DiscoBeat · 04/04/2023 08:37

however, the iht exempt gift level of £3k is worth looking at for annual gifts.
Yes, my MIL did this for years on her accountant's advice.

AnnaMagnani · 04/04/2023 08:47

We had the chat with FIL who sounds a lot like your DF, and the PP's mum - sitting on loads of money but scrimping and saving in a run down house. Insisted he was saving it for his children but absolutely no financial planning going on.

It took a family intervention during which he kept saying 'the money is for my children' and everyone else kept saying 'the tax man is getting it' for action to happen.

And by action, the family organized absolutely everything otherwise it still wouldn't have happened.

CaptionChaos · 04/04/2023 08:50

My in-laws are also over invested in the tax efficient (low interest rate) cash iSA's. They've benefited from final salary pensions, buying shares in the 80s, inheritance from at least three estates. They also had some lean years which have grown in the telling and they did effect my DH growing up.

DH is one of three and they all have two kids. Suddenly the pot looks a lot smaller divided by six.
I'm taking on extra work, commuting costs have rocketed, I'll have a kid at uni, one teen at home and we're travelling an 8hour round trip to support grandparents at weekends. Potentially we'll have the hassle of three houses to sort out because they kept two houses, small and over two hundred miles away in a lovely but cheap area, they inherited which are now rented below market and sadly run down ( hobby landlords).

When I think of it, I am sad that my fil is so arrogant to think he'll live for ever, maxing out his iSA's but leave us with IHT and the nightmare that will be negotiating between three siblings at a time when their careers are busy.