Will planning and tax

[TwoTigers]

Currently my Mum's estate is left to me approx £600k. She keeps saying she wants my DD to benefit - she asked if I'd want to keep the house if she still owned, which I don't. I do now she wants to avoid paying as much tax as she can, like we all do!

I understand that if the monies and house that make up her estate were to pass directly to me, an IHT allowance will pass to me from my Dad's estate. Am I right? I think his estate was £140k around 30 years ago.

If she doesn't remake her Will, am I right in thinking I can only give DD certain amounts from monies in my own name - ie £3k a year, £5k if she gets married and I'd get away with paying for all of her wedding without tax implications if I die soon(ish). Could I get away with paying for anything else? Thinking this would just come out of a big pot in my name after Mum's estate administered.

I could do a Deed of Variation after death, but I guess that prevents any IHT benefit.

Alternatively, she remakes her Will, giving us a certain percentage each which I guess is all taxable.

See a solicitor or more appropriate, ask your Mum to.

I don't understand a lot of your post. Is your dad alive?
she wants you to keep her house if she still owned which she doesn't.
??? Makes no sense - have you made typos?

Your mum won't pay IHT- she will be dead. The tax will be paid out of her estate by her beneficiaries.

No, if your mum leaves everything to your DD (or anyone else) the estate would still benefit from the allowance from your dad’s estate. That part doesn’t depend on her leaving it to you.

If he left everything to your mum, her estate will be able to pass down £650k without any IHT. If she leaves her house to you or your DD, that’s an additional £350k (or the value of the house, if less).

ETA - this is the basics, obviously your mum might have other things going on with her estate.

The £1M is for couples where one left it and a house to the spouse. If one surviving spouse has assets of £1M IHT tax is paid.

For children, who inherit, it's the surviving parent plus their assets from their spouse and an additional £175K if they leave a house to their children.

Her mum doesn't get an extra £325K to include

(it's £325 kper person not £350)

Maybe I worded it badly but yes, I’m sure.

Her mum will have inherited her dad’s nil rate band if he left everything to her. This will mean her mum has a nil rate band of £650k regardless who she leaves it to. OP sounded like she thought this only applied if it was left to her.

The residence nil rate band (which OP’s mum will also have got from OP’s dad) is another £350k (£175k from each parent). This is the part that requires the house to be left to a direct descendant - OP or her daughter.

You can make any gift you like and provided you live for another 7 years it is free of inheritance tax. These are called PETs (Potentially Exempt Transfers).

Furthermore, you can do a 'deed of variation' on your mother's will at the time of death (or up to 2 years after death, I think) whereby you as the inheritor vary the will to direct some of your inheritance elsewhere.

That's not how it's described online. It's only £175K from her mum not her dad as well.

The £175k residence nil rate band absolutely passes to the surviving spouse if not used by the deceased spouse.

Thanks, I'll go through what you've all said.

"AllezAllezPronto" sorry if I didn't make my post clear. When I said if she still owned, I meant if it or any other property hasn't been sold before she dies. My Dad passed away 30 years ago, leaving all his estate to my Mum.

She'd definitely go through a solicitor. She's very mentally capable, but absolutely does not listen to what's being said - a visit to a solicitor will be a chance to tell him all about her holidays/how bad it was when my Dad died, what she doesn't like etc, so I want to try and understand in order to so try and tell her what I've gleaned before and write down in the hope she will concentrate on words when no one around. She's always been like this, so not old age - has no social concept about a joint conversation.

You will need to check but it seems your mum will have the following IHT allowances: 325k standard+175k if passing house to direct descendent +140k inherited allowance from your dad. Total 640k. So should all be exempt. Passing money directly to your DD won't make a difference.

His estate was £140k. Thats not the allowance he passed on.

If he left everything to his wife, his full allowance of £325k standard nil rate band and £175k residence nil rate band pass to his wife to add to her nil rate bands.

It would be sensible for you to go with her if possible, if she doesn't listen.

I'm slightly confused by 'your dad's estate' - does this mean cash assets?
If that was £140K in cash or the value of cars, valuables, that is her money now as they were married. Has she never spent any of that in 30 years? Is it a sum of money she has stashed away as 'his'? I'm slightly confused as my mum is a widow and when dad died she inherited nothing from him as everything was in joint names.

And of course any decent solicitor would keep her on track, produce the Will and she needs to understand it.

As a by the way do you have POA?