Give the money away and live for another 7 years. Can't get much simpler than that. Convoluted trust arrangements that the government of the day may subsequently declare illegal, often retrospectively, are often a waste of money.
Thanks. The gift will be spread over two tax years so as to use the CGT allowance of both of the "givers" and ensure that the recipients start without a tax liability. One of the reasons for doing this is to reduce the value of the estate; the "givers" expect to last more than 7 years but if they don't then there's still some advantage. The givers do not live in the house (it's let) and state benefits are unlikely to be relevant. After a quick family conference the setting-up of a trust is starting to look like the preferred option, but more research is still to be done.
You definitely need specialist advice from a competent tax professional. As has been said, tax planning of this sort is very hard to get right,and getting it wrong can bite you very badly in a few years.
You also need a good legal person to set up the property ownership side of things.
It
Something else to consider: if the house is let the owners will need to consider who pays the tax on the rental income. AIUI you can assign the income (for tax) either (1) equally to all the owners or (2) in the actual proportion to their ownership but not in any other proportion.
Robert
True - it will be assigned in proportion.
Alas even that is not straightforward. You need to make sure the giver retains no benefit from what they have given away, else the gift can be deemed to have not happened for the purposes of IHT.
(Worth noting that the 7 years is a tapering relief - full whack for the first three iirc, then reducing year on year for the next four)
Circumstances changing means not only those of the testator, but also legislative changes most of which the layman will not even hear about let alone consider updating their will for. As for choosing a solicitor the best way is personal recommendation. My choice would be for a medium sized form that is large enough to have a will specialist rather than a sole practitioner or a large firm that has high overheads. If a trust is involved then choose a STEP member i.e. one who specialises in what is a very complex area of law which many high street solicitors simply don't have the experience or expertise to deal with.
Peter Crosland
On 14/09/2011 00:29, John Rumm wrote:>>>
Indeed. Father gives daughter his paintings, but goes round to her place for lunch every Sunday, thereby still enjoying a tiny fraction of the "benefits" of seeing them hanging on the wall. How mean is that?
IHT is unique in that the deceased can't be cross questioned, so a lot of decisions are based on what "most likely" happened 7 years ago. Did he give that money to his family or did he put it on a horse? Of course the burden of proof is always on the executor.
He didn't say your will is stupid.
Robert
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