loaning money from direct gift by DOV

by **worden** on Thu Jan 05, 2012 8:23 pm

Hello again

---getting to point of despair ---

Trying to weigh up differences of setting up a Trust by deed of Variation or giving the assets direct by DOV.. 1/2 house in isuue, worth approx £200.000 with approx £90.000 cash. If done by latter if the money is redirected to another beneficiary/ies who in turn lends it back to the person who has executed the DOV and an iou put as charge on the house as he already owns the other half, would this be seen as trying to avoid IHT? and questioned later>?

Complex stuff this inheritance tax!!

by **pqtaxation** on Thu Jan 05, 2012 9:41 pm

worden wrote: Complex stuff this inheritance tax!!

It certainly is the way you write your post!!

Perhaps if you describe why you think IHT is an issue in relation to assets valued at £290k and the objectives you are trying to achieve with a trust then people here may help you more easily.

by **worden** on Thu Jan 05, 2012 9:57 pm

ok fair point!!! my apologies just wanted to make it short.

brother and sister lived in house --- both unmarried and no children. House was held as tenants in common, half each. total value of house £400.000 and both have savings of approx £90.000. Sister has died leaving her half of house and money to brother. If the brother does nothing when this is passed down to next generation there will obviously be large sum of IHT to pay. --- hence---- my question------

If the house and money were to be redirected by DOV into trust or directly given to other beneficiaries and the money loaned back to the beneficiary who complted the DOV --- would this be seen as trying to avoid IHT? ---- sorry i am trying --- hope this makes sense!!

by **maths** on Thu Jan 05, 2012 11:29 pm

The surviving brother could execute a DoV in favour of a newly created trust (for example) and/or to other persons absolutely.

The DoV would not be effective if its execution was on the basis that the new beneficiaries agree to relend monies back to the brother (ie consideration for executing a DoV is not permitted).

However, the DoV could be executed and whether the new beneficaries relend back to the brother is then up to them.