Yet another IHT question sorry

[randomuseranonquestion]

Hi All - throwaway account as want to keep this anon and powerfully built directors will know more. All theoretical but firm for example and implications, a wonderful first world problem, and not my problem as I wouldn't be here!

One 'home' £500k
Rest odds and sods to make total estate £1m. Zero debts, mortgage whatever.

Unmarried, no civil partnership, but would want to pass home to long term partner. Other £500k of assets ideally split to couple of other non related people. No kids.

No other IHT quota / allowances left over or similar.

If I have calced things right I die tomorrow estate has £230k liability, which will be felt by the others I wish to pass things on to.

Looking at either IHT insurance (expensive?) or Life Insurance but in a Trust (which? who would be beneficiary?) to help cover the liability left to others if I cark it. That seems to need to be outside of my estate for settlement.

Aside from 'get married', any other thoughts?

Thanks!

[dalenorth]

I can’t advise on the trust route, but we have had an influx of clients wanting life quote (whole of life) to cover the IHT liability, so it’s certainly a hot topic.

Drop us a pm if you’d like us to run any quotes with the PH discounts.

[isleofthorns]

the 175k property allowance only works if leaving to a direct descendant - not a partner.

so, iht more like 270k

[peekay74]

Surely getting married is the answer ? House transfers tax free and reduces liability left to others as you would still have full IHT allowance ?

[OddCat]

peekay74 said:

Surely getting married is the answer ? House transfers tax free and reduces liability left to others as you would still have full IHT allowance ?

Don't let Rachel Reeves hear you saying that as it might give her ideas.....

[randomuseranonquestion]

Thanks for the replies so far - I might need Angie's advisors !

@dalenorth out of interest any indication why more are looking at it? Am I right in thinking on setup its Trust / named beneficiary so outside estate and then they basically use it (hopefully) to offset any bill?

[2 sMoKiN bArReLs]

I'm 66 and a commitmentphobe.

We've booked our civil partnership for the end of the month. Apparently not to do so is lunacy!

(Me n 'er indoors have only been together for 33 years, so I feel I might be being a bit hasty)

[isleofthorns]

2 sMoKiN bArReLs said:

I'm 66 and a commitmentphobe.

We've booked our civil partnership for the end of the month. Apparently not to do so is lunacy!

(Me n 'er indoors have only been together for 33 years, so I feel I might be being a bit hasty)

it's looking that way.... getting hitched is sound financial planning (bar getting divorced obviously!)

congrats by the way...

[dalenorth]

randomuseranonquestion said:

Thanks for the replies so far - I might need Angie's advisors !

@dalenorth out of interest any indication why more are looking at it? Am I right in thinking on setup its Trust / named beneficiary so outside estate and then they basically use it (hopefully) to offset any bill?

I think it’s just that more and more people are dropping into the IHT bracket as it’s ridiculously low when you factor in inflation. Yes any life policy written into trust for IHT or any other purpose mitigates IHT. You can leave an expression on wish to state what you want to happen with the cash.

[2 sMoKiN bArReLs]

isleofthorns said:

it's looking that way.... getting hitched is sound financial planning (bar getting divorced obviously!)

congrats by the way...

Thanks!

[mikeiow]

2 sMoKiN bArReLs said:

I'm 66 and a commitmentphobe.

We've booked our civil partnership for the end of the month. Apparently not to do so is lunacy!

(Me n 'er indoors have only been together for 33 years, so I feel I might be being a bit hasty)

We have a broad friendship group, many of whom we’ve been pals with for decades, and many of whom were unmarried couples.
Had a few of them taking out Civil Partnerships in recent years (approaching or in their 60s). I think one couple can beat your 33 years too!

We joke about it (with them) being a Pensions Sharing day: it does make a lot of fiscal sense.

& congrats too - do celebrate it with a nice meal at least

[Blue_star]

Its crazy that laws in this country allow people with such a high net worth avoid tax. I mean if you are married couple - you worked together all life. But outside of this is crazy to me.

No judgement btw we all need to operate under the law.

Edited by Blue_star on Friday 5th September 07:13

[Ry.Clarke]

It’s not something I’ve ever considered tbh, I don’t give a toss what the IHT is, it’s not my problem.

It is fascinating to see so many of you full on panic about it though, I suspect you’re all fully aware you could solve your little issue by helping those around you before you croak - at least that way you’d actually see it do some good too.

Will be sticking around to see what transpires tbh as like I say, I find the whole topic fascinating.

[GiantEnemyCrab]

Blue_star said:

Its crazy that laws in this country allow people with such a high net worth avoid tax. I mean if you are married couple - you worked together all life. But outside of this is crazy to me.

No judgement btw we all need to operate under the law.

Edited by Blue_star on Friday 5th September 07:13

Probably because they have already paid a fking bucket of tax to accrue it (property primary residence gains aside).

eg they have already paid once.

[Shnozz]

mikeiow said:

2 sMoKiN bArReLs said:

I'm 66 and a commitmentphobe.

We've booked our civil partnership for the end of the month. Apparently not to do so is lunacy!

(Me n 'er indoors have only been together for 33 years, so I feel I might be being a bit hasty)

We have a broad friendship group, many of whom we’ve been pals with for decades, and many of whom were unmarried couples.
Had a few of them taking out Civil Partnerships in recent years (approaching or in their 60s). I think one couple can beat your 33 years too!

We joke about it (with them) being a Pensions Sharing day: it does make a lot of fiscal sense.

& congrats too - do celebrate it with a nice meal at least

What is the attraction of civil partnerships over marriage out of interest?

[Blue_star]

GiantEnemyCrab said:

Blue_star said:

Its crazy that laws in this country allow people with such a high net worth avoid tax. I mean if you are married couple - you worked together all life. But outside of this is crazy to me.

No judgement btw we all need to operate under the law.

Edited by Blue_star on Friday 5th September 07:13

Probably because they have already paid a fking bucket of tax to accrue it (property primary residence gains aside).

eg they have already paid once.

I dont know mate, property appreciation (insane level) comes tax free, saving tax on pension contribution, saving tax on pension growth, saving tax on s&s isa growth, and all of this while all asset classes baloon at the expense of government borrowing equaling gdp; more than twice government budget. I dont think people had it that tough. Taxes were 30/60% in 70ies; nowadays a lot lower….

I think the system helped a lot.


Btw not sure if OP is like me but I have seen some horror stories once rich people were married. So I fully understand why there would be hesitation to marry.

I think great way to avoid inheritance tax is to help people you want to help today. Issue is - what do they actually need today and how op income is currently available to distribute without causing income tax when extracting it. Then giving cash/high value presents, loans…

[mikeiow]

Shnozz said:

What is the attraction of civil partnerships over marriage out of interest?

I *think*, for them, it was simply railing against the “society expectation” to marry.
I guess the Civil Partnership makes it more of a paper exercise to them.
That said, one of them still refers to it as her “nuptials”….without perhaps realising that word means “wedding”

Anyway….it secured the ability for pensions to be shared on passing of one. An admin task, much like completing the financial and health powers of attorney. Which is still a task we haven’t yet done….

[trevalvole]

There are IHT exempt investments, though it would be reasonable to expect that you pay a premium for them because they can save you 40% tax. Also, some of the charges are old-school - sizable annual ones and sometimes upfront ones too.

[isleofthorns]

Blue_star said:

Btw not sure if OP is like me but I have seen some horror stories once rich people were married. So I fully understand why there would be hesitation to marry.
…

I can imagine, as you get older, the prospect of losing half in divorce, or 40% in IHT seem equally unpalatable......

[Blue_star]

isleofthorns said:

Blue_star said:

Btw not sure if OP is like me but I have seen some horror stories once rich people were married. So I fully understand why there would be hesitation to marry.
…

I can imagine, as you get older, the prospect of losing half in divorce, or 40% in IHT seem equally unpalatable......

Talking about people losing a lot more than 50%..