Is there a legal(ish) way to give cash to our children ?

[chris-suffolk]

Try googling "deprivation of assets". The issue being that if you give away most or all of your money / assets, and then need to fund care home costs, but have no money left, the local authority can (will) come after you and the recipient of the money to get it back. I think you can get around it, if you are young enough (not sure being in your 70's is), so best to take some specialist financial / legal advice.

 

[Electric_Andy]

My dad had the same quandary and discussed with his financial advisor. Basically he's bought into a holiday scheme and gives us a free week every year. For the rest of the year it is rented out and as members we get a few quid a year. All legal, but certainly less than 3k a year

 

[oldwheels]

Not been to a financial expert yet.....just testing the water here.
I will say at the outset that I doubt there is.
Situation......
We are both well into our 70s and will never spend what we have.
The rest is, I think, fairly obvious.

Yes but you really need a clued up financial advisor. Not all FA's are equal and some are a bit dubious. I gave my family a substantial gift a few years ago and my son's accountant passed the idea as legal and they were not liable to tax on it but things change. There could also be a time limit and you have to live I think 7 years after the gift to avoid complications.
I am not a FA and never will be so anything I say is just personal opinion.
There are other options but probably not strictly legal so I am not going there.

Edit to add it should be an Independent Financial Advisor and not one tied to anyorganisation like a bank for instance.
A reputable accountant could be better.

 

[figbat]

Try googling "deprivation of assets". The issue being that if you give away most or all of your money / assets, and then need to fund care home costs, but have no money left, the local authority can (will) come after you and the recipient of the money to get it back. I think you can get around it, if you are young enough (not sure being in your 70's is), so best to take some specialist financial / legal advice.

True to a point. The test is supposed to be that you knew or could predict that health care was going to be needed before offloading your assets (hence the assumption that you did it in order to receive state funding and avoid paying). But how this test lands in real situations may be dependent on the stakeholders involved.

 

[PK99]

True to a point. The test is supposed to be that you knew or could predict that health care was going to be needed before offloading your assets (hence the assumption that you did it in order to receive state funding and avoid paying). But how this test lands in real situations may be dependent on the stakeholders involved.

OP is well into 70's. Health care needs are very predictable...

 

[PaulSB]

Legalish? It's either legal or illegal there is no ish. Find a good financial adviser and probably a good solicitor.

Our wills are designed in such a manner that on second death everything will be held in trust for our sons who are both the benefiaries and trustees of said trust. Surprisingly that is legal.

You say you will never spend what you have. If so spend some of it, probably thousands, on quality advice for your children's benefit.

 

[bikingdad90]

To delay the tax burden there is a gift holdover declaration that can be made between both parties which effectively shunts the tax onto your daughter on her disposal of the assets or shares gifted.

The Capital gain tax allowance is £12,300 where as the inheritance tax threshold is £3,000 but the rate of tax is higher. Depending on figures it might work out cheaper to invest the money and then gift it across….

https://www.gov.uk/gift-holdover-relief

 

[HarryTheDog]

A friend of mine gave both his kids 25k each for deposits on their houses. He tells me he took financial advice on it and he was told he could give them as much as he liked as long as he does not die in the next 7 years , inheritance tax etc.
He had to give the mortgage company a letter.
Below is from a website
https://www.mortgageadvicebureau.co...f-youre-using-a-gifted-deposit-to-buy-a-house

The main thing when you’re using a gifted deposit is that you must prove the money is a gift, without expectation of repayment.


A Gifted Deposit Letter is usually all that’s required. For this, you must include:

• Their name
• Your name
• The total sum given
• A statement that it is a gift
• A statement that the gift has no commercial interest
• Confirmation that the gift giver has no financial or commercial stake in the property
• Confirmation that the gift giver is financially solvent and in a position to provide the gift

 

[chris667]

Apart from a sabbatical, I ran a Willwriting company from 2004 to last year, and in the course of my career I've written about 6,000 Wills for all sorts of people. I am not qualified to write them any more (on my retirement insurance now so no new business) but I could say some general things about inheritance tax (in England and Wales but not Scotland) if you're interested.

To preface this, I will let you know that every few months, I would meet someone who had read about a "scheme" on the Internet, and some of them coming really unstuck because they did something that worked against them later. I will never forget the time I told a couple in their sixties that the gift of the house they made to their son could make them homeless as he was getting divorced. It's dangerous to follow things you read online or get advice on a forum. The advice might not be right for you, or it might be based on a misinterpretation of the law from the person who posted it.

Are you expecting that one of you will need to go into care, or are you just worried that one of you might go into care? There are things you can do in the latter, but if it's the former you do need to be really careful.

Or are you just worried about inheritance tax?

 

[PK99]

A friend of mine gave both his kids 25k each for deposits on their houses. He tells me he took financial advice on it and he was told he could give them as much as he liked as long as he does not die in the next 7 years , inheritance tax etc.
He had to give the mortgage company a letter.
Below is from a website
https://www.mortgageadvicebureau.co...f-youre-using-a-gifted-deposit-to-buy-a-house

The main thing when you’re using a gifted deposit is that you must prove the money is a gift, without expectation of repayment.


A Gifted Deposit Letter is usually all that’s required. For this, you must include:

• Their name
• Your name
• The total sum given
• A statement that it is a gift
• A statement that the gift has no commercial interest
• Confirmation that the gift giver has no financial or commercial stake in the property
• Confirmation that the gift giver is financially solvent and in a position to provide the gift

All that is correct, but it is worth nothing that the gifting letter relates to the mortgage and is not a tax issue. The mortgage Company need to avoid complications of disputed ownership of the property or loans against its value. They get very twitchy when money goes direct from your account to theirs without ever being in the ownership of the person taking out the mortgage.
We gifted the money into our daughters account, and she transfered it via her solicitor.

 

[Ming the Merciless]

OP is well into 70's. Health care needs are very predictable...

No treatment or care required for next 10 years.

 

[vickster]

Except unfortunately the OP has often mentioned that he and his wife have been / are experiencing ill health so that may or may not be the case. Sensible to prepare for every eventuality

 

[I like Skol]

Just what is it that you are attempting to avoid here?

If it is an attempt to dodge paying for care costs should you become unable to look after yourself then I won't say anything other than if your kids want that money so badly then maybe they can provide your care rather than it being paid out from the money you don't need and will never spend?

On the other hand, if it is inheritance tax you are trying to avoid then for a couple are you aware that this is only liable on estates valued over £750k? (£325k ea).

My mother died 15yrs ago and her IHT allowance transferred to my father who died nearly two months ago and the appointed solicitor dealing with the estate has confirmed the £750k figure. I guess with the value of properties as they are currently that exceeding the £325k limit will not be unusual, while exceeding the £750k couples limit is only a problem for the more well off.

Obviously you need to confirm this, but I would think that retrospective IHT on gifts made within 7 years would only apply if the value of your estate, including the gifts, exceeded the IHT threshold that applies to you as a person or couple?

 

[Beebo]

I’ve often wondered about who will actually come looking at and cash transfers.
A couple of grand here and there will never be seen.

I would just give the money anyway, if you live 7 years then great. If you don’t then there is no loss.

I have no idea how big your estate will be, but a married couple with a home can effectively have a tax free estimate of something like £800k if you ensure the transfer is done correctly. And that’s a pretty big estate.

 

[Chislenko]

My mother died 15yrs ago and her IHT allowance transferred to my father who died nearly two months ago and the appointed solicitor dealing with the estate has confirmed the £750k figure. I guess with the value of properties as they are currently that exceeding the £325k limit will not be unusual, while exceeding the £750k couples limit is only a problem for the more well off.

Our estate would exceed £750k but I wouldn't say we are well off. I suppose it depends on how the estate is made up.