Are 'lifetime gifts' always exempt from inheritance tax?
My mother would like to give our son £30,000 to put down as a deposit on his first house and she is concerned about the tax situation. If she were to die within 7 years of this gift being made, would my son be liable for IHT and is there protection she can take out specifically to cover this possibility?
I think that your wife need not worry.
Inheritance tax on lifetime gifts is payable from the estate of the person who has died, not on the person who has received the gift. The exception to this is when the estate of the person who has died is, for some reason, unable to make that payment.
The current (2010/2011) threshold for inheritance tax is £325,000, so the position would also depend upon the value of her other assets and where they go.
Although your personal situation should be discussed with an independent financial adviser or tax adviser there would be no tax due if, for example, her total estate is below the threshold at the time of death, or she willed up to the threshold at the time to anybody, with the remainder going to you (her husband) and/or to charities.
| 12.10.10 @ 11:27