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Where Taxpayers and Advisers Meet

Inheritance from abroad

SYR
Posts: 40
Joined: Tue Dec 13, 2011 12:22 pm

Inheritance from abroad

Postby SYR » Fri Aug 10, 2018 12:26 pm

Hi

A client's mother passed away in 2017 in HK and she is due to inherit £800k in total.

£400k has already been remitted into UK and the other £400k will be remitted when the assets are sold off.

She considers to give the money to her two sons but does not want to affect her NRB.
She also considers giving the 2nd £400k to his sons when the money is available.
The remitted £400k will already exceed the £325k IHT threshold.

Question:
Could she do a Deed of Variation in UK to avoid using her NRB
what does she need to do?

Thanks

maths
Posts: 7340
Joined: Wed Aug 06, 2008 3:25 pm

Re: Inheritance from abroad

Postby maths » Fri Aug 10, 2018 2:02 pm

Is the client UK or non-UK domiciled for IHT purposes?

SYR
Posts: 40
Joined: Tue Dec 13, 2011 12:22 pm

Re: Inheritance from abroad

Postby SYR » Fri Aug 10, 2018 4:23 pm

Client is UK resident (over 30 years), non-UK domiciled .

bibescu
Posts: 16
Joined: Tue Sep 21, 2010 9:33 am

Re: Inheritance from abroad

Postby bibescu » Sat Aug 11, 2018 1:01 am

It looks like your client's mother is liable for IH and assuming she is non domiciled UK, the assets will be subject to HK legislation.
Your client will receive money from her mother, there is no liability here and no obligation for anybody to file an IHT return.

bibescu
Posts: 16
Joined: Tue Sep 21, 2010 9:33 am

Re: Inheritance from abroad

Postby bibescu » Sat Aug 11, 2018 1:12 am

Sorry for previous comment, I misunderstood.
However, she is deemed UK-domiciled for all tax purposes after living in Britain for 15 out of the last 20 tax years.

SYR
Posts: 40
Joined: Tue Dec 13, 2011 12:22 pm

Re: Inheritance from abroad

Postby SYR » Sat Aug 11, 2018 8:22 am

Sorry for any misunderstanding...
Client's mother non UK resident - never lived in the UK
Client is UK resident and UK domiciled for IHT purposes

Hopefully, by having a DOV - client can divert the inherited monies to her children without worrying about lifetime transfer etc as her own wealth exceeds £2m.

The 1st £400k is already in her UK bank account, ready to be transferred to the solicitors for the purchase of a house in her sons' joint names.

Just wondering if it would affect the logistics of the DOV.... Does the fund need to be in the boys bank account?

Many thanks

maths
Posts: 7340
Joined: Wed Aug 06, 2008 3:25 pm

Re: Inheritance from abroad

Postby maths » Sat Aug 11, 2018 5:22 pm

The client who is deemed domiciled for UK IHT purposes may execute a D0V re-directing her inheritance from her mother.

Preferably it would have been better if the inheritance (ie monies) had not been received in the UK by it seems the client. However, this doe not preclude a DoV being executed. The execution needs to be done asap and the monies should be transferred into client's sons bank accounts.

In any event the DoV must be executed prior to the entering into any contracts to purchase UK real estate. Any such contract should be in the names of the sons, not mother.

SYR
Posts: 40
Joined: Tue Dec 13, 2011 12:22 pm

Re: Inheritance from abroad

Postby SYR » Sat Aug 11, 2018 8:10 pm

A joint bank account for the two sons will have to be arranged ASAP.

Hopefully, my client can get a solicitor to prepare a DOV..

Thank you, maths

AGoodman
Posts: 383
Joined: Fri May 16, 2014 3:47 pm

Re: Inheritance from abroad

Postby AGoodman » Mon Aug 13, 2018 12:19 pm

I don't see any need for a new joint account - just pay it to each child 50% each and they can then transfer their half on to the conveyancer.

SYR
Posts: 40
Joined: Tue Dec 13, 2011 12:22 pm

Re: Inheritance from abroad

Postby SYR » Fri Aug 17, 2018 11:07 am

Thank you AGoodman

Two more questions please.

Date of Death 17/01/2017
Date of Variation - say 01/09/2018

Rental income from HK property in the estate:
from 17/01/2017 to 01/09/2018 = declared in client's tax return?
from 01/09/2018 = declared in the sons' tax return?

Thank you


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