wills and inheritance distribution

[brummie]

Hi everybody

My parents, both in their 80's, have finally decided to write a will and discuss their estate. At the moment they own a house, worth around £100k and have savings and investments to about the same figure. They have asked me to look at the possibility of investing the cash amout until they pass away, and then to distribute the funds to my brother, sister and grandchildren with eqal amouts of their direction. They have also stated they wish me to act on behalf of the estate.
Firstly, if i invest the money will i have to declare it to the revenue, which i would then be liable for taxation on the amount, or is it possible to locate the monies in a form of trust in the benefactors names? With the amounts mentioned, is there a risk of inheritance tax being deducted or do i fall below the threshold set by the government?
They obviously want to keep some of the money available for the future,with regards to possible expenses for care and the like, and still want their house to live in. This will form the remainder of the estate when they are both passed.
With regard to the will.
They are both compus-mentus, but at times a little behind the times with legalities and remembering. As they have requested i act for the estate should i at any point be involved with the will-writing?

Regards,
Brummie.

[Guest]

Re: wills and inheritance distribution

Hi everybody

My parents, both in their 80's, have finally decided to write a will and discuss their estate. At the moment they own a house, worth around £100k and have savings and investments to about the same figure. They have asked me to look at the possibility of investing the cash amout until they pass away, and then to distribute the funds to my brother, sister and grandchildren with eqal amouts of their direction. They have also stated they wish me to act on behalf of the estate.

Your parents want you to act as their Attorney, the person responsible for administrating your property and affairs.

Your parents need to apply for a Lasting Power of Attorney.

Firstly, if i invest the money will i have to declare it to the revenue, which i would then be liable for taxation on the amount, or is it possible to locate the monies in a form of trust in the benefactors names?

There is no such trust that will avoid taxation. Your Parents might be looking at something called a Pilot trust. This is nothing to do with the airline industry. The finance Act 2006 introduced them so a person can declare up to £350,000 of their assets and ringfence it into a trust so it becomes exempt from Inheritance tax if they survive seven years after setting up the trust.

If your parents (I assume they are maried to each other) combined estate is under £650,000 when they die, then there is no need to use a trust to exclude them from IHT. Their estate is below the threshold which an estate starts to pay inheritance tax. Over £650,000 then the estate pays IHT at a rate of 40%.

With the amounts mentioned, is there a risk of inheritance tax being deducted or do i fall below the threshold set by the government?

Your parents are well below the threshold. Their estate pays no IHT at all. Remember, their estate must still be declared for taxation on a Form IHT205 then they die. The tax bill sent by HMRC to the executor will be for £0.00.

They obviously want to keep some of the money available for the future,with regards to possible expenses for care and the like, and still want their house to live in. This will form the remainder of the estate when they are both passed.

If a parent needs to go into residential care, the local authority has a right to charge the cost odf that residential care to their assets and property. Most commonly the family home.

They can take steps to protect the family home by setting up a Protective Property Trust in their wills which ringfences a divided half of their home in trust for their children while allowing the surviving parent to lifetime use of the home. Should the surviging parent need to go into care, the deceased share of the property cannot be charged by the local authority.

If you have a very savvy will writer, he can draft the trust instrument in their Wills so it can limit further, the amount the property can be charged down to as little as 15%, leavnig up to 85% of the family home to pass freely to the children in death of the 2nd parent.

With regard to the will.
They are both compus-mentus, but at times a little behind the times with legalities and remembering. As they have requested i act for the estate should i at any point be involved with the will-writing?

If you are looking at setting up a trust in your parents wills to protect the family fortune from other peoples grubby mitts, then you need an expert draughtsman who specialises in this line of work.

[brummie]

Re: wills and inheritance distribution

WOW!!

That is great. Youv'e answered what i beleive should be quite a simple operation, obviously with the right draughtsman.

Now to find such a person.......