Help... Thinking about IHT, money for grandchildren etc. Any advice

D) the gift is outside of giving from regular income

Cabbie21

D) the gift is outside of giving from regular income

Regular gifts, out of income, can equal generous amount, over time.

It’s really sensible to pause before making sizeable gifts. A solicitor or regulated tax adviser can confirm the current nil-rate and residence bands, annual exemptions, gifts from income, and what records you should keep—rules can be surprisingly specific. For grandchildren, agree with the parents what the money is for and who controls any account or trust, and keep a simple dated gift log. A Junior ISA or trust may be useful, but neither is automatically right for every family. Your own financial security comes first, too.

From experience for some children getting a large sum of money at 18 causes more problems than it solves.

Premium bonds when they are younger with a proviso to re-invest any winnings

At 18 I have advised them to cash in and go into a stocks and shares isa, there are several good companies with managed funds

I hope OP is sorted now, old thread.

If you have surplus money from income after paying all your living costs, that can be given away to children/grandchildren without it attracting IHT provided it is a regular eg monthly amount. Give money away from savings etc as early as possible as if you die within the 7 years it all goes back in to be assessed for probate. My SIL has recently died, they downsized and she gave away a huge lump of money to her children and sadly died 6 years later, the executors are faced with a huge tax bill as the remaining estate wipes out the IHT free amount. There is a lot of confusion over the rules concerning "tapering" ie if someone dies within the 7 years, it is assumed that the tax will be tapered according to the number of years someone has outlived the initial gift but that is not the case as gifted amount will be assessed first and if it "wipes out" the £325K allowance, the rest of the estate will be assessed for IHT. It's quite complicated so I have copied an explanation and attached a link but it is something to be aware of.

"What are the most common misunderstandings regarding PETs?
Taper relief

Taper relief is often misunderstood as a significant tax-saving measure. Many believe that if someone survives just three years after making a gift, a large portion of IHT on the gift will be reduced. In practice however, very few people benefit from Taper relief.

For example, if a person makes a gift and does not survive the seven-year period, the gift becomes a “failed PET,” and IHT may be payable on it. While the donee (the person who received the gift) is typically responsible for paying this tax, the donor can specify in their Will that the gift is “tax-free,” meaning the tax would instead be paid from the donor’s estate.

When calculating IHT after death, “failed PETs” are taxed first, using up the donor’s nil-rate bands in priority to the rest of their estate. Taper relief only applies to failed PETs in excess of the available nil-rate band. As a result, unless someone has given away gifts exceeding their nil-rate band in the seven years before they pass, the relief does not come into play."

www.pricebailey.co.uk/guides/a-comprehensive-guide-on-potentially-exempt-transfers-pets/

I was talking to dd the other day about the Gdcs’ S&S ISAs - which incidentally so far have done very well - I was worried about the dangers of a substantial amount of cash at 18 - particularly for Gds- now 10. I’ve been having visions of him blowing a lot on an expensive car and then writing both himself and the car off….

Dd said she just wouldn’t tell them! Would leave it until they’re (say) 25.
That hadn’t even occurred to me! Dh says he can’t see why it wouldn’t work.

Witzend

When they reach 18, don’t they have to go in the child’s name?

Irresponsible or not, they are then classed as adults.

I suppose some children are still immature at 50 or so, and can’t be trusted with money, but ….