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Where Taxpayers and Advisers Meet

Gifts to children in US IHT implications

blobby
Posts:2
Joined:Wed Aug 24, 2016 4:26 pm
Gifts to children in US IHT implications

Postby blobby » Wed Aug 24, 2016 4:46 pm

Hi:
I am married to a US citizen, living in the US, and am now a US citizen myself. My mother still lives in the UK, and is concerned about IHT. My question is, could she set up a recurring gift to my children (or me) for, say, college funds, and transfer the money to the US without risk of it being clawed back if she passes away within 7 years? What about a lump sum? Are there any ways for her to remove money from her estate by transferring them to the US? We're also trying to see if she would like to move over here; it seems like becoming non domiciled is a bit of a trick, but if she sold her house and moved to the US and bought something here would that be enough?
Any advice for this situation would be good. I've tried to tell her that having to pay taxes is usually a sign that things are pretty good, but she really wants to minimize her IHT.
TIA,
Blobby

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Gifts to children in US IHT implications

Postby pawncob » Thu Aug 25, 2016 5:13 pm

IHT on the gifts will only become due if she dies within 7 years. If she leaves the UK and adopts a domicile of choice, she won't suffer UK IHT (but may suffer US equivalent).

If she depletes her UK estate so much that there are no UK funds available to pay the IHT on gifts after death, HMRC can whistle for it.

To ensure that any move meets your requirements, take specialist advice.
With a pinch of salt take what I say, but don't exceed your RDA

blobby
Posts:2
Joined:Wed Aug 24, 2016 4:26 pm

Re: Gifts to children in US IHT implications

Postby blobby » Thu Aug 25, 2016 7:00 pm

Thanks for your reply. So would you say that theoretically if she remained in the UK, but essentially liquidated all her assets and transferred them to me in the US, HMRC would have no recourse if she died within 7 years? Or would they only have no recourse if she were non-domiciled?


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