Finance Dads policies have just matured he wants to treat my sister & I, what happens if dies within 7years?

Question

My dad is 71 not in the best of health, drinks 2 much!! He's only ever given my sister and I £20 at Christmas and £10 at birthdays. However he would spend fortunes on catalouge adverts and end up with cr*p usually being spontaneous when drunk, and others taking advantage of him. We sorted out and sent alot of stuff back and got the junk mail stopped. He now wants to give me and my sister some money out his policies that have just matured that he took out for us to make our lives easier he says £20,000 each however what would happen if he died within 7years as you are only allowed to gift £3,000 per year (inheritence taxes etc) how could we get round this, my life would be so much easier bu don't want a tax bill should he die (this is not mean't to sound callous) He never realised the tax issue and is now upset he never gave it earlier and honestly so am I. Any ways round this legally??

Answer 1

You can't ... & if he transfers the money to your Bank Account you can be sure the Tax man will find out.... so I suggest you stick to the Tax free gift limits each year ...

However it is not unknown for old folk to have the occasional flutter on the horses etc. .... so if he gets through a lot of cash, well perhaps he has been off to the betting shop with £1,000 in cash every month ... after he's dead & the cash is spent, who's to say where it went ?

Answer 2

Inheritance tax only starts when the value of your dad's estate reaches 300 000 pounds, - including the house, insurance policies (if not written in trust), and any savings and investments.
This rises to 600 000 pounds if he has a legal partner.

If the estate is under 300 000 pounds, there is no problem whatsoever.

20k each can be given freely. If your dad dies within 7 years, then some or all of the gifts will be included in his total estate for the calculation of death duties. It can get a little complex

Does your dad have a will? Do you? Does your sister? Thats often the cause of many delays, at the very least.

Answer 3

you will have to pay tax on it if he dies. i'm in the same boat as you. most of my dads money will go to the tax man when he dies even though he's paid tax on it all his life. it stinks. but i agree with steve b. your dad could pretend he's gambled in some way & lost it all. he could declare giving you £3000 & put that in your bank. the rest he could give you in your hand. the only problem with that is your money in a bank it can make you more money with interest but stuffed under your bed it makes nothing. you have to way up whats right for you