Estate Planning and gifts

(Liora Torn-Hibler) #1

I have a 90 years old client, in a very good health, who wishes to gift half of his property to his beloved son.
They both live in the same property.

To avoid being trapped in the GWRB, the son will contribute 50% towards all running expenses.
The client if fully aware of the risk, that this might be a failed PET, if not survive full seven years.

Any other relevant aspects which needed to be taken into account?
Anything in HMRC manuals in respect of any further guidance?

Any advice would be greatly appreciated! Thanks.

Liora Torn-Hibler
Berlad Graham LLP

(Simon James Northcott) #2

No reason why the father should not pay more than 50%, and it is better from an iht point of view if he does. It is the son who must not pay more than 50%

Simon Northcott

(Liora Torn-Hibler) #3

Thank you Simon. Any authority why the father should pay more than 50%?

Liora Torn-Hibler
Berlad Graham LLP

(Simon James Northcott) #4

If the father pays all outgoings then there can be no argument that he is getting a benefit back from the son which is treated as a GWROB. He should certainly pay a minimum of 50%, and if in reality he benefits more from
occupation than the son, perhaps his area of occupation is larger, then the minimum should be more.

Simon Northcott

(timadams) #5

The other thing to watch is that if the PET fails, the value of the transfer will be based on the diminution in value of the donor’s estate. The joint ownership discount therefore works in reverse, and the actual amount transferred will be considered to be more than a mathematical 50% share.

Mind you that was based on an experience I had back in CTT days but I don’t think it’s any different now!

Tim Adams

Barlow Robbins

(Liora Torn-Hibler) #6

Thank you Tim for making this valid point which is easily overlooked.

Liora Torn-Hibler
Berlad Graham LLP