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IHT Planning

I have recently retired from my employment with an insurance company. I receive a pension of £30K per annum. I am 61, my wife is 60, and my 4 children are 15 -25. I own a house worth £500K with no mortgage, and I have savings in building societies of about £150K. I would like to make my children joint owners of the house with me and my wife, so that they are well provided for if I should die in the next 10 years. I have been told that there will be IHT and Stamp Duty to pay if I do this. The alternative seems to be to set up a trust, but this will be costly in terms of set-up and running costs. Does anyone have any other ideas to achieve the same outcome, please?

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By Anonymous
10th Jan 2010 18:49

Without some form of trust

you cannot have all 6 of you named as owners of the house because the permitted maximum on the title deeds is 4.

Does your wife have any assets of her own? Why are you apparently the sole owner of the marital home?

Is she currently in receipt of a pension?

The 15 year old and any other child still under 18 are minors and would not be permitted to sign a contract of this type.

Have either of you been married to someone else previously?

Unless your question is not giving a complete breakdown of your assets the most efficient thing you could do from both a tax and personal point of view would be to ensure that the house is owned by you and your wife as tenants in common and to ensure that you both have up to date wills made by seeking proper professional advice in drawing them up.

Unless there is a health problem you could perhaps also dse a part of your income and savings to pay for term life assurance written in trust for your children. This would also help to pay for any IHT

 

 

 

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By Anonymous
10th Jan 2010 20:05

2 lots of exempt amount?

Not an expert but do you think you may be entitled to 2 lots of exempt amount?

From your total net worth deduct 2 lots of exempt amounts, any left over- utilise annaul gexempt gift ammount and you may find that there is no or a small ITH proble, can be covered by I belive as the previosu post suggested an Insurance Policy written in trust.

Ignore all above go and see an accountant, solicitor or an IFAand make sure that they have experience in these matters.

Enjoy your retirement on a a good pension like that.

 

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By Anonymous
10th Jan 2010 20:17

Is your wife your first wife and mother of your children?

Whilst seeming a strange question it does depend on what you want to do. If the answer to the above is yes then in my opinion you need to ensure your wife is secure first. She will obviously ensure that your children are OK whilst minors. You are both relatively young and surely do not want to destitute each other. By giving away money to early then you will risk the security of each other. If you gave your marital home to your kids now one of them could get married and then divorsed and if your marital home is owned by your kids it is as asset of theirs and brought in to the divorce.

Sit down with a good solicitor and tell them your situation is, listen to their advise go home think about what you want to acheive and then go back and have a properly drafted will. Consider having the will changed/updated regularly when new events happen like marriage,divorce, grandkids etc.

If you do not have a will now then get one ASAP as you have a statutory will whereby your wife will only get the first £250K.

You would have £650,000 in transferable nil rate bands between you so you will not need to pay any IHT.

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14th Jan 2010 12:11

IHT concerns

First of all, any house etc owned by more than one person [including the normal joint ownership of husband and wife etc] is held on a "trust of land" - so don't worry about having a trust. Similarly, although title can be held by no more than four persons, they can hold as trustees for as many children etc as you have/want.

I am more concerned at the reference to IHT, since gifting a share of the house to a child [or anyone else] whilst continuing to live there would normally be a Gift with Reservation Of Benefit ie that share would remain in the donor's estate for IHT purposes, and the seven year period would not even start to run, unless you either pay market rent or the child continues to live in the house with you [and you continue to pay at least your share of all outgoings] in which case you should also consider how the pre-owned asset charge may affect you.

Furthermore, if the child lives elsewhere no principal private residence relief, so he/she could end up being liable for CGT on any increase in the value of the gifted share of the parent's house on top of the unchanged IHT liability ..... and would not thank you for that!

As indicated by other posters, seek specific advice - preferably from a STEP member.

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