Independent Financial advice.

[Bod]

What should I look for when choosing an advisor?
My area of interest is mainly Inheritance Tax avoidance.
I know personal recommendation is good, but I am in a new area, so don't have the contacts.

Bod

 

[RogerS]

I would have thought a quick google would be your best option. Moneysavingexpert pops up at number one when I just searched. Followed by a host of other 'on-the-face-of-it-kosher' sites.

 

[Random Orbital Bob]

normal procedure is to gift the assets to your children. You must then survive them for 7 years to qualify for the avoidance. My Aunt did this to her 2 kids ie she signed the deeds to the house over and they in return signed a contract allowing her to live there until death. That was ten years ago. She's 90 now. When she goes, bless her, they inherit the house with no IHT.

I think there is a more complex trust fund route too but that's where you need the advisor.

 

[Mr_P]

A relative of mine was recently warned off normal procedure.

Apparently things can get very messy if the offspring dies/divorces and the other half then gets the house/half of it.

 

[Jamesc]

Have a look at http://www.moneysavingexpert.com/savings/best-financial-advisers. for some good advice.

Pick a few you like the sound of and give them a call, make sure that they are familiar with the areas you are particularly interested in.

All of the advisors I have dealt with have given a free initial consultation. Make sure you get on with them. You are going to be inviting them into your home for a good many hours and whilst they may be capable, if they get up your nose then the whole process can be something you dread.

Also check that they are truely independant. Many advisors I have had experience with have their pet company that they like to deal with. Not necessarily because they get the higest fees, more often because they are familiar to them.

James

 

[themackay]

Just spend it

 

[Cheshirechappie]

Ask around for a solicitor with a good reputation in Probate and family tax matters. You'll get less biased advice than from a financial adviser; the latter may be tempted to try selling expensive and possibly unsuitable financial products.

The rules can be a bit complicated, especially if you're married. The IHT threshold effectively doubles if you are, with tax only becoming liable after the passing of the second person. However, I'm not sure whether your wills have to be worded a certain way to take advantage - hence the solicitor's advice.

 

[Phil Pascoe]

A good point that was made to me was that if the person seeking to avoid taxes was likely to leave anything to charity, although it would be taken from the estate before inheritance tax was applied, it would be better given before death as then gift aid would apply. This assumed of course that the person was a tax payer.

 

[DiscoStu]

The point about who survives who is very valid. If you sign over your house to your son and he dies but his wife inherits from him then you're living in a house owned by your daughter in law, and what if she no longer has the funds to keep up with the mortgage on their family home. Even with the best intentions if anyone was to look at her finances they would see a home that was owned by her that had no mortgage on it and would be classed as her asset. Imagine that if she went through bankruptcy? I'm sure a solicitor can help with this and that you can gift the house to your son but have it that a clause must be that if you out survive him then it must be returned to you etc.

 

[paulm]

I'm thinking that there may be capital gains tax issues too where the parent's home is owned by the offspring, if the children already have their own home as principle private residence, then when the parents home is eventually sold the children would be liable to CGT on any increase in value on that home from date of legally owning it to date of eventual sale ? Could still be less than inheritance tax though depending ?

Cheers, Paul

 

[themackay]

I was under the impression that if you give house to kids and then live it they have to charge you rent ,sure I read something like that somewhere.you also never no what issues may crop up in the future detrimental to your kids because they own assets,all a bit of a minefield.Im spending it now if they dont get in in inheritance tax they will take it off you if you end up in a home ive seen that happen to a few people now

 

[ColeyS1]

Inheritance tax seems so wrong. You pay taxs on everything through out your life, than as a final blow they tax you when you pop your clogs :|

 

[Sheffield Tony]

Inheritance tax seems so wrong. You pay taxs on everything through out your life, than as a final blow they tax you when you pop your clogs :|

On the other hand, you could view inheritance as perpetuating inequality, and inheritance tax as going some way towards redressing the balance.

I thought that the state had made this harder recently, but I can't recall why. There is another huge downside too. You get rid of all your assets so that you can avoid inhertance tax. Then should you find yourself unable to live independently, your assets are safe from being used to fund your care. BUT - you place yourself at the mercy of whatever care the state is willing to provide for you. I'm with 'themackay' on this one - I'd rather my parents spend their money on whatever they need or want, than do without in order to avoid tax or leave it for me.

 

[themackay]

If one has to pay inheritance tax I would rather be given an option to donate it ta a charity chosen by myself rather than give it to the government to squander.

Tony you get much the same care whether you pay for it yourelf or the state pays if you are funding yourself in a home would you believe you pay a higher rate than a state funded person because you susidise them as well.

 

[Phil Pascoe]

Certainly. My point was that if you're a tax payer, it's better to give it to a charity before you die than than leave it to them in your will. Anything to keep it from the government. Of course, in Cornwall if you die intestate your estate goes to Prince Prat - even more reason to give it away!

 

[Alexam]

normal procedure is to gift the assets to your children. You must then survive them for 7 years to qualify for the avoidance. My Aunt did this to her 2 kids ie she signed the deeds to the house over and they in return signed a contract allowing her to live there until death. That was ten years ago. She's 90 now. When she goes, bless her, they inherit the house with no IHT.

I think there is a more complex trust fund route too but that's where you need the advisor.

Sorry Bob, but that's not so....................FACT.
Your Aunt has retained a beneficial interest in her home and as such her home WILL count as part of her assets when she dies. If she received advice 10 years ago was totally incorrect and if your Aunt has a net worth of over £325,000, her estate will pay IHT on the balance. If your Aunt was married and her husband dies before her, with his assets having passed to her, then his nil rate band allowance will also be passed on, so only tax after £650,000. There may still be time to do something.
This is a specialized area in which I worked for many years.

 

[Harbo]

Go to a good solicitor - we did a joint will ( we were advised not to go down the Trust path for reason cited above) cost £250.

Rod

 

[Phil Pascoe]

It might be even better if you can get some recommendations for a good will writer. We had one, he was expensive when all the wills were done, copies in storage etc. but hell, he brought up potential problems that we hadn't even thought about. They're more specialised than many solicitors.

 

[DiscoStu]

I think it depends on how complex your estate is. Most solicitors can handle wills easily.

 

[Alexam]

Wills are not usually a problem for most solicitors. Even Will writer's can do this, however, when it comes to the more advanced stages of IHT strategy within your Wills, that's a very different matter.

Inheritance tax planning, as said by others, is a special area that many solicitors and Will writes do not understand, although they may 'imply' they do. I have sat down with both solicitors and Will writers in the past and been surprised how little they know beyond the basic Will writing. My role was to help explain the 'extra' detail that was needed within the Will and I was only present at the request of the client, as they felt that my knowledge may be helpful.

I can no longer offer advice, as I have retired, but under another name, I often correct certain errors of others on a money site when people are asking questions about inheritance tax. There are many ways to save a great deal of tax and they dont cost a lot to set up.

Just be careful and take advice from someone you can trust and who has been specializing in this IHT area for some years. Only then can you possibly find the right solutions for your particular circumstances.