IHT- how to avoid if you have enough wealth

escaped

I'm sorry I used the word "pittance", it was a bad choice ("relatively small amount" would have sounded better), but this is a topic that causes me upset when people suggest that I am, at this stage in my life, deliberately depriving any government of what rightfully belongs in their coffers. Or that I was born with a silver spoon in my mouth. I am neither tone deaf, nor crass, but my opinion is built on personal experience and I feel I should be allowed to express it without criticism, and without implying I would have to pay £1 million in IHT.

escaped You won't pay a penny in IHT - you'll be dead. If IHT is paid on any assets you currently own, your children, who haven't earned the assets, will pay it.

ronib

Allira agree. There are some very dysfunctional and unhappy very rich families too but isn’t good health the best protection against inequality? Very little has been done to research causes of inherited diseases and to prevent these genes being passed on down the generations. That’s the biggest contributor to social inequality in my book.

As long as people are born with different intellectual capabilities, there will always be inequality.

More can be done to give every child the best possible start in life and education but as long as a highly educated professional earns more than an unskilled worker, there will be inequalities in society.
Some regimes tried to eradicate their highly educated, skilled professionals but I would say that's a rather extreme solution to the problem.

Of course there will always be inequality, but there's no reason why inequality should be made worse, just because some people happen to have wealthy parents, who might have inherited wealth from their own parents - and so on.

In my opinion (to which I'm entitled without being an extreme idealogue), people should start from the same starting block - what they do with their talents after that is beyond my control. If I were to race Usain Bolt, I have no doubt he would always win, but there would be no reason to give him an advantage at the starting line.

I'm not advocating the eradication of highly educated, skilled professionals (I gave birth to two of them), nor suggesting they should be paid the same as people with less skilled and demanding jobs. All I'm saying is that I don't think that they have done anything to have a headstart in life.

Allira not quite accurate - very highly educated university researchers /lecturers are paid a pittance. Although for those with scientific degrees and into state of the art products, earnings can improve amazingly on joining a startup. It depends on individual motivation and interests surely?

growstuff you do sound heavy work as a parent. So glad to hear your children overcame their initial difficulties. Many do. Humans are remarkably resilient.

In my opinion (to which I'm entitled without being an extreme idealogue), people should start from the same starting block

So to follow that to its logical conclusion, inheritance of any kind would be abolished and any of the deceased's assets would be seized by the state.

If every child should have exactly the same starting block in life, does that mean they should be reared in exactly the same way? The only way to achieve that equality would be by being brought up the State, as some are born to wealthy parents, some in poverty therefore circumstances are different right from the start.

I think it was the Khmer Rouge which copied Maoist principles and tried that but it didn't end well.

ronib

Allira not quite accurate - very highly educated university researchers /lecturers are paid a pittance. Although for those with scientific degrees and into state of the art products, earnings can improve amazingly on joining a startup. It depends on individual motivation and interests surely?

One of my DD is a university lecturer and I believe she does earn more than a friend who works in Tesco.

Allira social influencers earn more than both. There are still ways of getting into education later on in life - it’s a much more fluid process. I have known outstanding students who eventually give up a great career to stay at home with their children.

Genes are of course a factor, but mentoring children to have a useful and productive lifestyle is more important, a good education is important. I’m ambivalent about private schools I know too many that all they have gained is a posh accent, a good state school is a better choice.

I have friends whose parents are well off and sent children to private schools, they have led “usefull” lives but at best all they have done is preserve the wealth, when other siblings get their share of inheritance, it’s divided up, they have not created wealth.

Being comfortable is a disadvantage there is no need to strive to create wealth, only one or two have had the entrepreneurial spirit, using existing assets to build for the future. Migrants have a very good record, starting with nothing, building a strong business quickly.

One reason I believe that Inheritance should be taxed more is because there would be more incentive for the next generation to build their own future

David49. Yes up to a point - lucky if there are sufficient good State school places now that public schools are beyond the financial reach of most aspiring middle class families.
Property prices are very high around London and the south east and only the upper middle class will be able to support children into buying a home.
Seems to me that Starmer has a real downer on the not too rich and is not tackling the very wealthy. Probably Starmer aspires to that class himself?

growstuff

Maizie I know not everybody is concerned about intergenerational inequality, but I am, and - as is so often pointed out on GN - I have a right to an opinion.

I wasn't dissing what you were saying, growstuff, I agree with you. I was just remarking that there is no consensus on the need for a more equable distribution of resources.

MaizieD

growstuff

Maizie I know not everybody is concerned about intergenerational inequality, but I am, and - as is so often pointed out on GN - I have a right to an opinion.

I wasn't dissing what you were saying, growstuff, I agree with you. I was just remarking that there is no consensus on the need for a more equable distribution of resources.

I agree with you too. I know some people don't agree.

David49

Genes are of course a factor, but mentoring children to have a useful and productive lifestyle is more important, a good education is important. I’m ambivalent about private schools I know too many that all they have gained is a posh accent, a good state school is a better choice.

I have friends whose parents are well off and sent children to private schools, they have led “usefull” lives but at best all they have done is preserve the wealth, when other siblings get their share of inheritance, it’s divided up, they have not created wealth.

Being comfortable is a disadvantage there is no need to strive to create wealth, only one or two have had the entrepreneurial spirit, using existing assets to build for the future. Migrants have a very good record, starting with nothing, building a strong business quickly.

One reason I believe that Inheritance should be taxed more is because there would be more incentive for the next generation to build their own future

I wasn't even discussing private schools. My only point is that people should start from the same starting block and not pretend (as some do) that they've earned every penny they own. If people are genuinely talented and hard-working they don't need the advantage of a headstart.

ronib

Allira social influencers earn more than both. There are still ways of getting into education later on in life - it’s a much more fluid process. I have known outstanding students who eventually give up a great career to stay at home with their children.

They're lucky to have that choice. Choice is often the privilege of the wealthy.

Allira

ronib

Allira not quite accurate - very highly educated university researchers /lecturers are paid a pittance. Although for those with scientific degrees and into state of the art products, earnings can improve amazingly on joining a startup. It depends on individual motivation and interests surely?

One of my DD is a university lecturer and I believe she does earn more than a friend who works in Tesco.

It depends what grade she's on. It's also possible that the Tesco worker has more security of employment.

David49 but I thought you made it quite clear that private education is in some ways a disadvantage .
Pupils need adequate and good teachers - that’s the best head start - and I believe can help disadvantaged children make up some lost ground.

growstuff it’s okay to be wealthy- it isn’t a sin.

Chice is available to everybody throughout their lives. Only some choices are limited by life circcumstances, whether wealth, health, what county you are born in etc etc.

Who would be a woman in Afghanistan, mo matter how wealthy?

Allira

^free spending in earlier years^

😁 in the case of many people (ourselves included) free spending was a dream of the future as we struggled with mortgages, bringing up children and trying to clothe and feed them!

We never know what fate has in store for us healthwise either.

When does spending (taxed) money someone may have managed to save in later life after bringing up a family, paying off a mortgage, become deprivation of assets which should be carefully squirrelled away in case the state needs part of it to fill the black holes created by successive Governments?

Did you read my post?

By 'earlier years', I meant earlier than seven years before your death, which anyway has no impact on IHT - only to paying for social care. IMO the idea of 'deprivation of assets' is iniquitous, and have often said so, usually to howls of derision on here. You won't find many arguments for means-testing from me, and definitely not when it comes to people spending their own money, whether blowing it at the end of their lives after keeping some back 'just in case' or on a spend-as-you-earn basis. I think it is very wrong to penalise one and not the other.

IHT is different, IMO, as the saver/spender is not taxed - it is their heirs who pay, and only then on money above (currently) a million pounds, which only applies to 4% of the population.

escaped

I'm sorry I used the word "pittance", it was a bad choice ("relatively small amount" would have sounded better), but this is a topic that causes me upset when people suggest that I am, at this stage in my life, deliberately depriving any government of what rightfully belongs in their coffers. Or that I was born with a silver spoon in my mouth. I am neither tone deaf, nor crass, but my opinion is built on personal experience and I feel I should be allowed to express it without criticism, and without implying I would have to pay £1 million in IHT.

I am not saying that you are tone-deaf or crass, but that your comment was, which you acknowledge. That's fair enough, we all choose the wrong word at times, and shouldn't be held to it if it is withdrawn or amended.

You are perfectly entitled to express your opinion, and you have done . Others will express theirs, though, and they may disagree, which is also ok.

I don't think anyone has implied that you would have to pay a £million in IHT. There I think it is you who has misunderstood others' posts. It is clear to me that you were saying that you would/will have to pay IHT on sums over £1m in your estate. Obviously if that estate is worth £2m that would mean paying tax on the residual £million, but there has been no suggestion that this is the case.

Deprivation of asset’s is a mute point

If I or anybody purchase a new car, go on multiple holidays in my/their retirement having saved during my/their working life for such things, it would be difficult to prove I or anyone had deliberately done these things to avoid IHT.

I/they/their families would have a good case for just living their best life after 50+ years of work…

ronib

growstuff you do sound heavy work as a parent. So glad to hear your children overcame their initial difficulties. Many do. Humans are remarkably resilient.

Oof! That was uncalled for.

I don't see anything wrong with inheritance per se. I think that wanting to give our children a leg up is an instinctive thing, and yes, attempts to squash that have always ended badly. People will find other ways if they can't leave money, and usually those ways are less straightforward.

whether blowing it at the end of their lives after keeping some back 'just in case' or on a spend-as-you-earn basis

That is something most of us cannot predict.

GrannyGravy13

Deprivation of asset’s is a mute point

If I or anybody purchase a new car, go on multiple holidays in my/their retirement having saved during my/their working life for such things, it would be difficult to prove I or anyone had deliberately done these things to avoid IHT.

I/they/their families would have a good case for just living their best life after 50+ years of work…

As I understand it deprivation of assets doesn't count towards inheritance tax. Gifting within seven years of death does, but you can spend what you like, so long as you don't leave yourself unable to pay for social care. I'm no expert though.