Inheritance Tax

[Macho Macho Man]

Is the following correct?

Let's say

Parent A has £1 million in cash and assets which are seperate from Parent B.
Parent B has unknown assets.

Parent A doesn't have a will but has a terminal illness.
Parent B wants the children to sign over rights to the estate to them.

So scenario A is that nothing changes children get £325K tax free and the rest is taxed effectively £675K is taxed @ 40%.

Scenario B is that children sign over rights to estate. Then when Parent B dies children get £650K nil rate band (this is what parent B is saying). So effectively only need to pay tax on £350K instead of £675K.

I believe however Parent B uses up the band when the estate transfers to them but since they are a partner they get the full lot tax free. Since estate is worth more than £325K therefore nothing is transferred to their nil rate band when they die therefore if they die the children still only get a £325K nil rate band and get taxed on the £675K.

am I correct?

 

[Fuggan]

O_o

 

[dowie]

are they married? If so I think you're wrong - the kids will get double the IHT allowance if it is essentially coming from both parents, the transfer from A to B is tax free and the IHT threshold applies twice when the kids inherit

check with a financial/tax advisor

 

[Btone]

if there no will is the cash and assets not split equally between parent b and the children ?

 

[peterwalkley]

Signing over rights to the estate sounds like a legal nightmare. What is to stop parent B leaving it all to the 18 year old gold digger mistress / toyboy.

Consult a lawyer.

 

[dowie]

if there no will is the cash and assets not split equally between parent b and the children ?

doesn't matter - can use a deed of variation

 

[dowie]

Signing over rights to the estate sounds like a legal nightmare. What is to stop parent B leaving it all to the 18 year old gold digger mistress / toyboy.

Consult a lawyer.

yeah solicitor should advise on that, they'll see one anyway to ask about handling the deed of variation they'll likely want to use to do this in the first place

 

[Macho Macho Man]

doesn't matter - can use a deed of variation

This is what is being proposed.

You seem to know your stuff. Any advice you can give? Can I get a guarantee that what would have passed to me does so later on? Parent A would want the money to be split equally however they have no mental capacity and Parent B has power of attorney / legal guardian. They say if I don't agree to the deed of variation they can make a will which leaves everything to them anyway. Is this true? So either I agree or they make a will using their power over Parent A.

Signing over rights to the estate sounds like a legal nightmare. What is to stop parent B leaving it all to the 18 year old gold digger mistress / toyboy.

Consult a lawyer.

This is what I am afraid of. If Parent B decides you know what you don't get anything and I leave it all to your brother and sister. It's not what Parent A will have wanted.

Unfortunately I've been given 12 hours to decide so cannot consult a lawyer.

 

[Tosno]

Seems so clinical...

 

[dowie]

I think you ought to go and see a solicitor regardless really, I can't give you advice beyond what I've posted already which is just a basic understanding of how this works. I don't however understand how you've only got 12 hours? This doesn't seem like the sort of thing you should rush.

 

[Destination]

You've been given 12 hours to decide by whom?
This just smells of legal awfulness.
Are they married?
Were there any previous marriages?
Are all children from the same parents?

 

[Destination]

Also be aware if parent b gets everything, and they remarry, then it makes the whole mess much more messy.
Sometimes something is better than nothing.

 

[Macho Macho Man]

You've been given 12 hours to decide by whom? Parent B
This just smells of legal awfulness.
Are they married? Yes
Were there any previous marriages? No
Are all children from the same parents? Yes, however siblings have turned parent B against myself so they are the favoured children of Parent B

This obviously is something I didn't want to have to do myself. I'm being forced into it. The apple being waved in front of me is that I'll pay less tax. However I have to give up my right to the money in order to do so.

It's not something I should be having to be put through with Parent A being so unwell.

 

[Destination]

Okay well currently with no will, intesty rules apply.
So an estate worth 1m, first 250k goes to partner, the half the remainder goes to partner, and the rest split between the kids.
So wife gets 250 plus 375, kids get 125k each.

Inheritance tax would apply, but i have no clue how this is applied as most of the money is going to the partner, and i believe initially this lot is tax free.

 

[Lakeland]

Someone trolling? If not, simple really, ignore their stupid deadline (turn off your phone) and speak with a solicitor first thing tomorrow morning.

 

[peterwalkley]

The more you reveal, the more this stinks. Sign nothing until you have consulted your own lawyer.

 

[Destination]

One thing, your op suggests that if parent a dies, the kids get the inheritance, my previous post makes it clear if there is no will, this is not the case, the kids get an equal share in half of the estate over 250k.
Are the parents married? Makes a massive difference.
If not then parent b has no right to anything at all.

 

[Macho Macho Man]

One thing, your op suggests that if parent a dies, the kids get the inheritance, my previous post makes it clear if there is no will, this is not the case, the kids get an equal share in half of the estate over 250k.
Are the parents married? Makes a massive difference.
If not then parent b has no right to anything at all.

What about the power of attorney thing?

Can they make a will on their behalf?

I don't know much about this just what I've been told by Parent B. It's not something I thought I would ever have to do.

 

[Destination]

Power of attourney gives you controls over someones financial matters.
I have no idea how that extends, it is the terms of a solicitor.
Are they married?

 

[dowie]

What about the power of attorney thing?

Can they make a will on their behalf?

I don't know much about this just what I've been told by Parent B. It's not something I thought I would ever have to do.

I think parent B is talking out of their arse tbh... AFAIK (IANAL) power of attorney doesn't extend to being able to make or change a will

What I'd do is NOT sign or agree to anything yet, explain that you would like some advice on the matter and make an appointment to see a solicitor ASAP