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  • Tax

    Just a thought on IHT and chidren

    I just want to share with you a thought about IHT

    we all like to think we leave something for our children when we pass

    some  of us would like to leave them a lot others want to leave them little

    when your children are working and earning a living They too can play a part in your IHT planning

    I offered my son the chance to insure my life and he paid the premium to cover the IHT bill which he will face

    so let's say your IHT Bill is 500k

    I apply for the life cover of £500.000 and the Insurance company give me the cover

    I put the Insurance into a Trust beneficiary my son and he then has the cash to pay the IHT Bill

    I take this tack on IHT its not really my problem its my son's problem so let him pay the premiums

    Long term he can't lose as long as he pays the premium

    so I  leave it to him to choose

    Pay a monthly premium and have the money to pay the tax

    Or allow the family trust to pay the IHT in instalments and then when the tax is paid he can then have the income.

    DL

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    Learn Change and Adapt ?????

    I really like the sound of that DL .  

    Life insurance seems such an easy way to resolve multiple succession issues in one hit and negates the need to do a lot of paperwork

    It also gives them an active responsibility going forward

    This is a total blind spot for me though

    Questions please.....................

    Are there any  advantages / disadvantages of using that insurance to pay down mortgages to prevent them being sold rather than just paying the  IHT bill?

    After death how long do they give the kids  to sell the portfolio if needs be to pay IHT 

    Do they give them an opportunity to take out a BTL mortgage to keep it going ?

    Is it better to sell them to them now or gift it to them or put them on the deeds and what taxes do you pay ?

    I want to gift lots of them to them and then live 7 years . Whats the best way to do that ?

    They are all currently in joint names with wife as joint tenants

    Thanks



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    Jonathan Clarke. http://www.buytoletmk.com


    IHT has to paid within six months or interest is due, it can be paid in instalments subject to interest on the outstanding balance,

    https://www.gov.uk/paying-inheritance-tax

    Selling or gifting them to children will trigger CGT.

    The ideal would be life cover for the mortgage amount and IHT.

    I want to gift lots of them to them and then live 7 years . Whats the best way to do that ?  -  Keep breathing

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    You can give them property un encumbered  with a 7 year rule for IHT

    I asked my lenders what would happen to encumbered property if I passed they all said they would look at the situation and look at who wanted to take over the mortgages but have to be re written in there names

    again given them insurance written in trust is helpful because there will be costs such as valuation fees arrangement fees ect

    Until the mortgages are settled they can not own the property

    If you have a Ltd Co this topic is much easier the company mortgages stay the same and you children would be come directors or share holds when you leave shares to them

    Debt is a good thing for IHT its 100% claimed of the gross estate

    This is why I have gone down the company route on death its much easier to deal with on the mortgage front but you still have  the IHT issue

    life insurance is the simple way of dealing with this issue but over the years it can be costly

    But this is why I prefer the person it helps to pay the premium





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    Learn Change and Adapt ?????


    as a side issue Pensions on the other hand are outside of your estate and can avoid most IHT

    a powerful argument to use pensions for passing down wealth

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    Learn Change and Adapt ?????