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Post by ladywhitenap on Apr 5, 2020 10:46:18 GMT
Re-thinking my will after 20 years of neglect. One thing I'd like to do is to make a cash bequest to someone who will likely need some money soon after my death. The value is likely to be ~2% of my net worth and equally likely to be available as cash without selling anything. This payout would be before grant of probate which is bound to take ages. Before asking my solicitor ( and potentially looking stupid ) is this something that can be included in a will? If push came to shove, could a smaller amout say 0.2% be paid as an advance pending probate if the answer above is "no" tia LW
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james100
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Post by james100 on Apr 5, 2020 11:10:49 GMT
ladywhitenapDepends on the numbers involved, flexibility of executors and potential tax implications a bit IMHO. Technically I think the answer is "no". You might want to consider taking out a life insurance policy (on your own life, named beneficiary) and having it written in trust so that the money is excluded from your estate and thus bypasses probate entirely. Also re-doing my will this year!
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Post by ladywhitenap on Apr 5, 2020 11:21:07 GMT
james100Thanks, I have a bit of an aversion to most forms of insurance. On paper my health is not good with a number of regular meds taken. I think this would force up insurance costs even though I'm fit as a fiddle thanks to careful monitoring by NHS. The fall back is to put the cash in an account accessible on my death by my fully trusted son and give him an expression of wish letter of who to give the funds to. LW
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Post by Badly Drawn Stickman on Apr 5, 2020 11:51:15 GMT
james100 Thanks, I have a bit of an aversion to most forms of insurance. On paper my health is not good with a number of regular meds taken. I think this would force up insurance costs even though I'm fit as a fiddle thanks to careful monitoring by NHS. The fall back is to put the cash in an account accessible on my death by my fully trusted son and give him an expression of wish letter of who to give the funds to. LW If your son is fully trusted then the simple solution is to gift your son the cash now and let him open his own account. Presumably a joint account with either party having full access would serve the same end? Whilst to be blunt any of us can go at any time, it would at least in theory offer a little bit more flexibility for adding more later if your health deteriorated.
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Post by Badly Drawn Stickman on Apr 5, 2020 12:11:29 GMT
Presumably a joint account with either party having full access would serve the same end? Whilst to be blunt any of us can go at any time, it would at least in theory offer a little bit more flexibility for adding more later if your health deteriorated. That’s possible a little more fraught because if it came to it, it could be argued that the account isn’t really joint because all the cash in it came from ladywhitenap and and the son didn’t “use” the account until death. So the cash in it would form part of the estate and you are back to the same problem. True, and I guess we could complicate the hell out of it given long enough (I do have that tendency). Arguably the gifting comes with some potential down sides, is there not a five year gap needed before death? I do always wonder how much effort is put in to checking these things unless there is a contentious party involved. I'm pretty sure that the 'powers that be' pay little attention in the detail unless the sums are sizable.
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Post by ladywhitenap on Apr 5, 2020 12:13:32 GMT
Presumably a joint account with either party having full access would serve the same end? Whilst to be blunt any of us can go at any time, it would at least in theory offer a little bit more flexibility for adding more later if your health deteriorated. That’s possible a little more fraught because if it came to it, it could be argued that the account isn’t really joint because all the cash in it came from ladywhitenap and and the son didn’t “use” the account until death. So the cash in it would form part of the estate and you are back to the same problem. I'd be reluctant to have a joint account with my son for that very reason. I think it would be one in his name with me having access to passwords/pins etc We already operate one like that as I manage the rental of a flat that he owns simply for convenience as I'm retired and he is busy working and studying. LW
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Post by moonraker on Apr 5, 2020 13:35:53 GMT
True, and I guess we could complicate the hell out of it given long enough (I do have that tendency). Arguably the gifting comes with some potential down sides, is there not a five year gap needed before death? I do always wonder how much effort is put in to checking these things unless there is a contentious party involved. I'm pretty sure that the 'powers that be' pay little attention in the detail unless the sums are sizable. Seven years, with tapering depending on how long is the gap between your making the gift and dying. You can make gifts totalling £3,000 each year (a sum that has remained the same for far too long), though one can make regular gifts out of income that are more than that, provided your standard of living isn't affected.
THE ABOVE IS VERY BROADBRUSH.
With "regular gifts" you are enjoined to keep very careful records. I too "wonder how much effort is put in to checking these things unless there is a contentious party involved". In my case, there won't be (though there are stories of claimants emerging out of the woodwork). For several years I've been making electronic payments to two people, using "disguised" payee names suggesting they are those of businesses. (One can't do this anymore with new payees, as one has to give their names on one's paying instructions exactly as they appear on their own accounts.)
I used to twitch at the thought of a solicitor costing my estate lots of money to sort this out were it noticed, but I've stopped payments to one person, so no problem if I live another seven years (but with Coronavirus ...) The other has just confirmed that she's been declaring my money as income on her tax return, so no problem there either.
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Post by Deleted on Apr 5, 2020 16:29:21 GMT
1) marry the other person and make them executor or 2) no
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Post by ladywhitenap on Apr 5, 2020 18:35:30 GMT
1) marry the other person and make them executor or 2) no
@bobo Interesting idea but I think the former might just cause more problems than it would solve, not the least of which LordWhitenap might have a contrary view too. I might mention it to my solicitor but in the mean time I will evolve a method outside of my will. LW
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Stonk
Stonking
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Post by Stonk on Apr 5, 2020 18:52:00 GMT
With "regular gifts" you are enjoined to keep very careful records. I too "wonder how much effort is put in to checking these things unless there is a contentious party involved". In my case, there won't be (though there are stories of claimants emerging out of the woodwork). For several years I've been making electronic payments to two people, using "disguised" payee names suggesting they are those of businesses. (One can't do this anymore with new payees, as one has to give their names on one's paying instructions exactly as they appear on their own accounts.)
I used to twitch at the thought of a solicitor costing my estate lots of money to sort this out were it noticed, but I've stopped payments to one person, so no problem if I live another seven years (but with Coronavirus ...) The other has just confirmed that she's been declaring my money as income on her tax return, so no problem there either.
But it is not income. Sounds like you are both conspiring to make it look like it is earned money rather than a gift. I'm not all that certain that declaring it as income makes it OK -- I would appreciate input here too.
I trust she hasn't been paying income tax on it, or it could end up being taxed repeatedly if you die and HMRC take issue with the arrangement. I can't see HMRC agreeing to refund any income tax that has been paid if they assess it was actually a disguised gift!
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Greenwood2
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Post by Greenwood2 on Apr 5, 2020 19:19:31 GMT
With "regular gifts" you are enjoined to keep very careful records. I too "wonder how much effort is put in to checking these things unless there is a contentious party involved". In my case, there won't be (though there are stories of claimants emerging out of the woodwork). For several years I've been making electronic payments to two people, using "disguised" payee names suggesting they are those of businesses. (One can't do this anymore with new payees, as one has to give their names on one's paying instructions exactly as they appear on their own accounts.)
I used to twitch at the thought of a solicitor costing my estate lots of money to sort this out were it noticed, but I've stopped payments to one person, so no problem if I live another seven years (but with Coronavirus ...) The other has just confirmed that she's been declaring my money as income on her tax return, so no problem there either.
But it is not income. Sounds like you are both conspiring to make it look like it is earned money rather than a gift. I'm not all that certain that declaring it as income makes it OK -- I would appreciate input here too.
I trust she hasn't been paying income tax on it, or it could end up being taxed repeatedly if you die and HMRC take issue with the arrangement. I can't see HMRC agreeing to refund any income tax that has been paid if they assess it was actually a disguised gift!
Just give a gift now and hope you live long enough, the tax due will be reducing each year. And give the individual tax gift allowance each year. Your solicitor and HMRC will look at any undeclared gifts (missing chunks of funds) so don't make it difficult for your heirs, it is difficult enough coping with these things without HMRC breathing down your neck!
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Post by moonraker on Apr 5, 2020 19:26:14 GMT
There's a lot that I haven't said here! Her accountant agreed that my payments to her were income.The situation is even more interesting/complicated as she has now moved overseas.
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Stonk
Stonking
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Post by Stonk on Apr 6, 2020 0:36:21 GMT
But it is not income. Sounds like you are both conspiring to make it look like it is earned money rather than a gift. I'm not all that certain that declaring it as income makes it OK -- I would appreciate input here too.
I trust she hasn't been paying income tax on it, or it could end up being taxed repeatedly if you die and HMRC take issue with the arrangement. I can't see HMRC agreeing to refund any income tax that has been paid if they assess it was actually a disguised gift!
Just give a gift now and hope you live long enough, the tax due will be reducing each year. And give the individual tax gift allowance each year. Your solicitor and HMRC will look at any undeclared gifts (missing chunks of funds) so don't make it difficult for your heirs, it is difficult enough coping with these things without HMRC breathing down your neck!
My thinking is that if a gift can be treated as income, and it is made to someone with no little or no existing income, then it can be considerably larger (i.e., up to the income tax personal allowance) than the standard gift allowance (£3K per year) before anyone has any liability to HMRC. It is also simpler because the 7 year rule for gifts would not apply.
Does work have to be done in order for income to be earned? Could I "give" £10K of "income" to someone for posting a letter for me?
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Post by Deleted on Apr 6, 2020 13:42:11 GMT
1) you or your estate gift money 2) the recipient receives either a gift (within tax rules ie £3k etc or 7 years etc) or receive income. If they receive income they have to calculate if they get taxed on it. If they receive income are they employed, in which cae pensions also come into the process and NI. If you are paying for a service (best to be auditable) then self emplyed rules come in.
This is not advice but if it were me I'd
1) aim to live for 7 more years 2) give them money 3) if you don't make 7 years, you don't care. If you do make seven years there is nothing to worry about.
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