Making Gifts From Your Estate

2 minutes reading time

One of the most common ways to reduce the value of your estate for inheritance tax purposes is to gift assets to children or other beneficiaries before you die. There are various rules that apply when making gifts from your estate, and there can be tax consequences and other implications of which you need to be aware.

Are there any rules attached to gifting cash?

It is easier to gift cash than any other asset. There are no issues surrounding transferring ownership and no capital gains tax implications. It is a good idea to keep a record of any cash gifts for future reference.

If you are gifting to reduce your estate for inheritance tax purposes, there are other rules to consider. You can make gifts out of capital of £3000 per annum without any inheritance tax issues. If you wish to gift more than this amount, then we can advise you on the inheritance tax rules and how best to minimise any tax consequences.

Can I gift my main home?

For many people, their home is the main asset in their estate. There are many risks associated with gifting your own home, and it is often not a good idea. This is the roof over your head, and if something goes wrong, you could be left homeless.

We can advise you on the options available to you concerning protecting the value in your home without taking unnecessary risks. If you have a taxable estate, then just giving away your main home but still living in it without further consideration will not work for inheritance tax purposes.

Can I gift other assets?

When gifting assets other than cash, e.g. shares or property, there may be capital gains tax to pay if the asset has increased in value since you acquired it. There is an annual allowance that you can use against any gain, and there may be other costs that can be deducted. We can assist in calculating the gain and also advise you on other ways to minimise any tax charge.

Making gifts from your estate

Inheritance tax rules

Inheritance tax planning is bespoke to your estate and family circumstances. What works for one family may not work for another. Our specialist team can advise you on how the rules apply to you and how to make the most of any thresholds and reliefs available. Gifting out of your estate is just one option, and there are different ways in which this might be done depending on your circumstances.

Care fees

If it is likely that you will need to go into care in the future, then you cannot gift assets out of your estate to avoid care fees. This is known as the deprivation of assets, and the local authority will be able to reverse any transfer of assets done for this purpose only, but at the same time, if you have already made the transfer, the legal ownership has technically passed to the new owner which may cause further taxation issues.

However, there are some options when it comes to planning for care fees and organising your financial affairs. We can discuss these options with you.

Other considerations

If you are gifting to one child and not to other children, then we will need to discuss whether you wish to balance out the gifts on death or not. In some circumstances, the law presumes that the gift is deemed an advance of a child’s inheritance. We can advise you on the law in this area and amend your Will accordingly. Usually, we would review your Wills at the same time as discussing gifting and other planning options.

Here to help

If you have any more questions or would like more information regarding making gifts from your estate, you can contact our Wills, Trusts and Probate Team below.

Contact Myerson Solicitors

If you have any more questions or would like more information, you can contact our Family Law Solicitors on:

0161 941 4000