Lifetime Gifts – Solicitors in Gosforth Serving Newcastle upon Tyne, the North East and Nationally
You may not want to wait until you die to give away some of your assets or belongings within your Will. We understand that you might instead want to make gifts during your lifetime – perhaps you no longer require the item in question, you consider there are others in more need of it than you or you simply want to be around to see the recipient of the gift enjoy it! While you are of course free to make these decisions about your own possessions, you must be aware of the possible future implications of your choices, which could result in the transaction actually being reversed or an increased liability on your estate in relation to future inheritance tax or care home fees.
At Birch & Co we have Specialist Solicitors who will advise if you need to make changes or simply put a note in the diary for another chat next year. As a result you can be sure we will deal with you in a sensitive and friendly manner, all the while ensuring a professional and efficient service is given.
DISCOVER YOUR FIXED PRICE QUOTATION NOW
Simply call us on 0191 284 5030 or complete a Free Online Enquiry now to discover your bespoke fixed price estimate
We are based in Gosforth with parking facilities easy access to the Metro at Regent Centre with a bus stop outside the office.
We strongly recommend that you contact us as soon as you start to consider the gift so that we can help guide you further. We can save you a lot of money and stress.
We have a 5 star rating on Google for the quality of our service and 99% of our clients are completely satisfied and would recommend Birch & Co to others. Please read some of our current clients’ Testimonials below of what they think of us. We hope that you feel the same way once we have looked after you.
“Rebecca has been extremely helpful (and patient!) while we prepared our wills. She is very knowledgeable and we trust her advice and would definitely recommend her”
“Rebecca made it so easy for us, when we thought a will would be really complicated”
What is a gift?
A gift is not only something of value (such as money, property, possessions) that you give away for nothing but also if you transfer an asset at an undervalue, say you sell your house for less than it is worth. The difference in value would be counted as a gift.
Gifts & Inheritance Tax
In calculating if inheritance tax is payable, the Executor / Administrator must take into account not just the assets at the date of death but also any non-exempt gifts made within the 7 years before the death occurred.
There are several categories of gifts that are exempt, but any that occur within 7 years of the date of death and which do not fall within any of the above categories use an individual’s Nil Rate Band first.
They may not therefore attract an inheritance tax liability but if they do, the tax is due to be paid by the recipient of the gift. The rate of tax is dependent upon how many years passed between the date of the gift and the date of death.
If you do survive the making of the gift by 7 years, the value of the gift does not form part of the inheritance tax calculations.
At the time of making the gift, it is a potentially exempt transfer and so is known as a PET.
In order for the time to start running, the original owner cannot reserve any rights over or enjoyment of the item. If this did occur, for example property title deeds were changed into the names of your children but you continued to reside there rent-free, this is considered as a gift with reservation of benefit and its value would not be considered as having left your estate.
Gifts & Care Home Fees
While care may not be an imminent consideration for you, if there are no other reasons for making a gift, a Local Authority might later argue that you have deliberately deprived yourself of an asset in order to avoid paying care home fees.
A Local Authority is not restricted by the same 7 year rule as HMRC are with inheritance tax and they can review a person’s financial history for unlimited years.
Any deliberate deprivation determination will result in you being treated as if you still held the asset (and therefore impact on your financial assessment) or even the reversal of the gift (if it was a more recent transaction).
Gifts by Attorney / Deputy
There are strict limits on the sorts of gifts an attorney or deputy can make on behalf of the person whose affairs they are administering.
Whenever possible, such decisions ought to be made by the Donor / incapacitated person however this will not always be the case.
If they cannot participate in the decision-making process, the gift can only be made in certain circumstances, having had regard to certain factors. Essentially it must be considered in the incapacitated person’s best interests for the gift to be made, which must be of a reasonable value and go to either:
- a family member, friend, or acquaintance on a customary occasion (such as a birth, birthday, wedding or civil partnership or anniversary, Christmas, Eid, Diwali, Hanuakkah, or Chinese New Year)
OR
- a charity, which they might have given to if they had mental capacity
FREE INITIAL ENQUIRY & OUR FIXED FEES
We are happy to provide you with a free, no obligation quotation for our will services.
We charge a fixed fee for all of our will services but the initial enquiry to discover what the cost will be for your sale or purchase is free of charge.
Alternatively, you can read more about our pricing here>>