Inheritance tax and legal gifts to family.

[NENew]

Parents with an estate of in excess of £650,000. They own a house outright at around the £200,000 mark.

They are keen to help their grandchildren financially, especially to get on the property ladder. One DGC already owns a small, cheap house, the others don't.

I'm using this guidance but would appreciate some simple advice.
https://www.gov.uk/inheritance-tax

What can my parents gift? Are there any risks?

(One parents is fit and well, the other not so much.
I'm thinking at this point dedication of assets would not be applied due to one parent being fit and well.)

Thank you.

But that’s not why the OPs parents are considering gifting what are relatively trivial amounts of money in the great scheme of their estate as it currently stands. So yes, it is scaremongering.

And also, even if the amounts were huge, giving the money away is not the criminal offence. Lying about if if you subsequently do need local authority help is the offence!!

@Tryingtokeepgoing the OP doesn't say what the amount will be and asks for the risks, so no it's is not scaremongering, it's being helpful.

Except the OP clearly says in her third post of the thread that the amounts are not “tens of thousands of pounds” and in her first post that the estate is in excess c.£650k and with no immediate need for care, never mind local authority support. Thats clearly never going to judged as deprivation of assets. And the OPs actual question was an about IHT, which it appears the estate is unlikely ever to be subject to anyway!

So yes, scaremongering. It’s only helpful if it’s actually true and relevant!

Op's second post said "I'm not talking ten’s of thousands, but a maximum amount, with no repercussions, to help DGC"

Between them they could give away 12k this year - 4k to each of the 3 grandchildren - with no possible tax implications. They are not currently in need of local authority support and would still have sufficient money left to cover average care needs. That's not deprivation of assets to avoid care home fees to any rational person (and therefore a court). They could give each grandchild another 5k, to match the 5k they had a few years ago - and it still wouldnt be deprivation of assets to avoid care home fees.

The op is perfectly clear.

Overall estate valued at £850k. (650+200 house)

Gifts being considered are less than 'tens of thousands'.

There are two people in the couple (so two different people own this £850k between them).

Noone is going to be charging anyone with a criminal offence here.

@Tryingtokeepgoing I don't know if you've been drinking today, but I was responding to the opening post where the OP clearly asks for help with regards to the risks. I was highlighting the risks that she may not have considered. It is important for people to understand the unintended consequences of giving money away that you may later need for your care. It is ludicrous that all you can add is that another poster who is trying to help is scaremongering. You should be ashamed of yourself.

@Luckydip1 Are you always so aggressive? You were scaremongering.

@anyolddinosaur not you as well...

It isn't a criminal offence to give money away even if you are trying to avoid care costs. That's absolutely scaremongering.

It's an offence to make an incorrect declaration when asked to do so in relation to your assets and previous gifts during an assessment process for care costs.

And the government doesn't 'claw it back' typically, but they'll treat you as if you still had it when assessing what your contributions should be.

If you give money away and as a result you can't afford your care fees and the LA is faced with paying for them instead when you would otherwise have been able to pay for them, they will be very sceptical about the gift.

That's not the same as claiming it's a criminal offence!

So at what age should you stop giving any money to anyone just incase you need care? It seems mad that you can’t do what you would like, when you’re fit and healthy, as a “just incase I need it in 5/10 years.”

Your parents will be absolutely fine giving away that sort of money, in fact they could give away much more without any comeback. They have left it pretty late as it is.
I've found on MN there are a couple of posters who get their knickers in a twist regarding care home fees and depravation of assets, IHT etc and will suggest that you never give a single penny away in your whole life in case you need it for care when you are elderly. We're spending and giving plenty of ours away and will continue to do so. We're hopefully many years away from needing care but we are not, not living or being generous now in case we need care when we're 80 odd.

Thanks, but no no drinking. Just common sense. The question was about IHT. You jumped to potential criminal charges. So yes, scaremongering. Or, a lack of comprehension ;)

You can do what you like with your money whenever you like if you judge there’s little probability of needing local authority support with care funding. Whether your judgement turns out to be right or not matters not at all as long as it was reasonable at the time you made it. Please don’t worry too much, and especially not about gifts of the quantum the OP is posting about!

But if at the time you gave away money there was little prospect of needing care they can be as sceptical as they like. There’s nothing they can do. And that miles away from the ‘criminal charges’ scaremongering in your earlier posts.

Perhaps you’d care to say how many people have faced criminal charges as a result of gifting money. I know. Do you?

My main question was about IHT which thankfully has been answered. My parents DGC’s will be fortunate to have another lump sum from them.

I'm not worried about Deprivation of Assets.

• My DM is fit and healthy
• The amount given away maybe £15,000 to £30,000 amongst all DGC’s.
• The amount left would be a minimum of £600,000 plus the house.
• Care home fees ( based on DMiL’s bill) are £6,000 per month - £72,000 per year leaving at least 8 years of care from their savings. Average time in a care home is three years.
• Parents have additional income too.
• I know that the lump sums wouldn't need to be ‘clawed back’. I know that there is a possibility that we might have to pay towards care fees if all money was spent after 8 years. I can do that. However, I wouldn't expect that the LA would challenge their financial planning given the information above.

A few broad points.

1. Keep records. Just so if there's any debate you can readily evidence what was done and when.

1. Don't ever refer in any formal documents to it being 'efficient in terms of care costs'. I know of a situation in Scotland where the LA is including in the calculations a piece of land gifted away 38 years ago, because the lawyer was stupid enough to put in a letter at that time that the 'transfer may also turn out in the fullness of time to minimise what can be taken to fund care'.

1. Don't be blasé just because there isn't an IHT liability just now. Incoming governments of a different hue may not be as generous as current rules are, both in terms of level of exemptions, what's inside and what's outside etc.

1. If you want to gift do it sooner rather than later. Surviving just 3 years can make a difference.

1. Consider the option of insurance to pay some or all of the bill instead of gifting stuff away that you might then have wished you'd kept. A suitable policy placed in trust can be an effective way to minimise the impact.

1. Keep a list of all your assets with your Will. Having been an executor on several occasions it's a real PITA searching through boxes and folders and drawers trying to find the necessary documents. I've a list of everything I own, every pension plan, every ISA etc along with details of policy numbers etc. It's a good discipline for me and it's a courtesy to whoever is trying to tidy up my estate.

@Tryingtokeepgoing I just don't want anyone following the advice in this post who may have different circumstances being faced with a criminal investigation.

They won't be unless they commit a criminal act.

None of what's being outlined by anyone I've read on this thread would constitute such an act.

@DeeHellem are you a solicitor or IFA? What insurance are you suggesting to put in trust?

A joint life, second death whole of life plan written in trust can provide funds on the second death, which fall outside of the estate and can then be used to settle some or all of the debt.

@DeeHellem that would cost a fortune, it would need to be RPI indexed. What would the monthly payment be in your 80s?

I wasn't suggesting it in this case. I was making the point that it's a solution for those planning their IHT affairs earlier in life who might not want to gift away stuff that they don't get know if they'll need.

Can be a lot less expensive than the tax!