Gifting assets – know the rules!
There are grandparents who will want to keep on giving: but how generous should they be?
It is natural that grandparents want to offer children and grandchildren support – they may be buying their first home, going to university or opening a bank account.
While nominal sums from earnings or wages, along with Christmas and birthday presents or helping with living costs are no problem, care is certainly required when the ‘gifts’ go beyond that and it may be wise for anyone considering substantial giving to take trusted and sound advice before doing so.
For example, did you know that people you ‘gift’ to could be charged Inheritance Tax if they are given more than £325,000 in any of the seven years before your death.
None of us wish to think of a time when we are not here to see our children or grandchildren enjoying the ‘gifts’ we may have presented to them. However, we cannot see into the future and it is important that we understand the full implications of any substantial gifting,
You may ask, what is a gift? Quite simply it is anything that has a value, including money, property or possessions. And when you think of it like that, you may soon realise that your ‘gifts’ to them could easily mount up.
For example, the price of an average detached house in Lincolnshire now stands at more than £250,000 and that clearly rises substantially depending on size and location. If you have a home worth more than the Inheritance Tax threshold and ‘gift’ it, then your death within seven years could come with a tax bill! ‘Selling’ at below the asking prices as a way of avoiding this Inheritance Tax will be picked up too – as the difference in value will count as a ‘gift’.
There are certain things you can do with no inheritance tax implications: annual gifts of up to £3,000 can be given; small ‘gifts’ of £250 to unlimited people (not to include those you have given £3,000 to); and gifts to charities and political parties are exempt.
The main point here is to be careful, plan the future out and be clear about just what you can and cannot to do.
For advice on all aspects of estate and succession planning and inheritance tax, please contact Lisa-Jane on 01522 515971 email firstname.lastname@example.org or visit wilkinchapman.co.uk