Inheritance Tax Scotland
 

Mum died yesterday, she has been poorly for a long time and the grief is mixed with relief. We are relieved she is no longer in pain.

Dad and I have been trying to sort out stuff this afternoon. They both have wills leaving everything to each other, then to me as next of kin (and only child)

Mum has approx £80000 in her own name, £200000 in an investment account and also £40000 in a joint account with dad. Dad has similar amounts in his own name. Plus the house which is valued at £220000.

Is dad able to give me the £80000 that’s in her account and what tax implications are there?

I know they are near the threshold for inheritance tax when dad dies if the money remains as is.

Firstly, I am sorry about your Mum but it sounds like the main thing is she is no longer in pain and at peace. My Dad died about 18 months ago and my Mum just over a month ago and to be honest I have left the Inheritance Tax calculation to my lawyer as limited information online and it is not always straight forward.

My understanding is that if your Dad gifts you the money and he dies within 7 years it will be added back to the Inheritance Tax Calculation for his Estate. It could also be classed as deprivation of assets if by chance he ends up having to go into care at a future date although from the information you have given he would probably be privately funded anyway.

As you are in Scotland (I am too) you could claim your legal rights as your parents cannot legally "disinherit" you which depending on the cost of doing this could save on the Inheritance Tax situation. Your legal rights would be one third of the moveable estate so not too much more than your Dad wishes to give you at this time. I really think you will need to get legal advice to work out the best way forward in your situation as I'm sure there will be alternative options.

Firstly, I’m very sorry to hear about your mum. I completely understand where you are coming from with knowing she is at peace, but she was still your mum.

I’m Not an expert on Scottish law, but from a quick read of this : https://www.mygov.scot/inheritance-tax-support/
The inheritance tax appears to be UK wide. I’d give the Scottish tax office a call to check - HMRC are really helpful.

The Uk position is that each person’s estate gets and inheritance tax allowance of £325k, so between your parents that’s a total of £650k.

In addition, each estate now gets a further £175k ‘primary residence nil rate band’. This can only be attributed to the deceased’s primary residence. So, if your house was worth £75k, you use up £75k of the residence nil rate band and you lose the other £100k as it cannot be applied to any other part of the estate.

A spouse can transfer some or all of their allowance to the other spouse. It will be transferred in full if your mum has left everything in her will to him. As your mum has left everything to your Dad, his IHT allowance on death, at current rates could be:

Standard allowance £650k
Plus
Residence nil rate band £350k

So, if all your parents assets (apart from the house) come to less than £650k and their house comes to less than £350k, there will be no IHT to pay.

Your dad can give you anything he likes now. It will be classed as an advance on his estate so any tax will only become due when he dies. Don’t worry about it for now, but there is also taper relief - eg the tax on the amount would start to decrease until after 7 years there is no tax liability remaining.

You may wish to investigate this...

Dad can alter Mums Will after death by a thing called a deed of variation. Then he receives less money and creates a legacy to you under Mums Will using some of her Solely owned money and part of her Inheritance tax relief.

As he now never had the money, the 7 year rule will not apply and its Mums legacy to you.

Discuss this with a Scottish Solicitor and see if it is feasible in Scottish Law.

Disney332

Thanks everyone for your replies, I was worried it would look like I was more interested in her money than grieving, which is very much not the case. Both dad and I are devastated by her death, but in truth we lost her some time ago and our grieving has been done.

We are both practically minded and are at best doing something. I know if dad were to need a care home, we would self fund, which mum has been doing.

It’s unlikely that at 88 if and when dad needs a care home any cash transferred to me would be deprivation of assets as given the remaining capital there should be ample.

Hi sorry for your loss, not easy to sort all this out at this time. It’s now very important to get legal advice and start moving money to you as soon as possible. My partner has been doing this this last year and in real terms this should have been done several years ago. But as all solicitors will do is Warn against moving assets to offspring who are married in case they separate and can claim share. In our case 2 daughters both married each with 2 children. I suggested some years ago that they should start giving the grandchildren as much as possible to keep in an account for after they finished collage etc.
For everyone sometimes not an easy subject to bring up but it really needs done .
Hope your father is well and with you for a long time

So sorry for your loss Jane 💐❤️
Can’t offer any advice but please get an expert opinion - too much at stake x

Sorry for your loss.

In Scotland any children are entitled to a third of a parents moveable estate (i.e. not the house) between them. So as an only child you are entitled to the whole third of your mum's cash assets without it being treated as part of your Dad's estate when he goes.
In our case our father died first and my brothers and I chose not to claim our third so it all went to our Mum, then her will split it between us when she died.
In your case it sounds like your Dad wants you to have that money so I think there is no problem. A quick check with a lawyer shouldn't cost you much and will make surei it's alli

OP, firstly let me extend condolences on your loss -I hope you and the family are doing ok.

Secondly, Colette is spot on here.

As well-meaning as it may be, there are a couple of bits of information already on this thread that aren't strictly accurate.

Please get professional advice before doing anything - a mistake at this stage could end up being costly.