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Where Taxpayers and Advisers Meet

Consequences of failed PET

maxaret99
Posts:8
Joined:Wed Aug 06, 2008 4:03 pm
Consequences of failed PET

Postby maxaret99 » Wed May 05, 2021 12:01 pm

I would appreciate some help with this scenario.

Married couple with residence worth £650k in husband's name only, and savings & investments of £950 K. Most of the savings are in wife's name., but husband's health is better. They want to give their son (only child) £500 K to buy a house , and are considering making a PET from husbands account because there is a stronger chance of his lasting 7 years.

Q 1 :If residence remains in sole name are they losing the wife's potential RNRB of £175 K?

Q2 : If money were to be transferred from wife to husband prior to husband gifting £500 K to their son, could this be challenged as an associated operation?

Q3 : If husband were to die within 7 years of making the PET, would it have been better to have left the money in the estate, or do they have nothing to lose by making the PET now?

Thank You.

AGoodman
Posts:1245
Joined:Fri May 16, 2014 3:47 pm

Re: Consequences of failed PET

Postby AGoodman » Thu May 06, 2021 3:41 pm

1. No - assuming they both leave their estates to each other and then the children.
2. In theory but I don't think in practice. The funds should certainly rest in husband's account so it is clear he is not just a conduit.
3. In general, nothing to lose from making a PET. It only becomes a balancing act with assets standing at a substantial gain (because you have to pay CGT and IHT on a failed PET but the asset would be rebased on death if retained).

maxaret99
Posts:8
Joined:Wed Aug 06, 2008 4:03 pm

Re: Consequences of failed PET

Postby maxaret99 » Fri May 07, 2021 10:35 am

AGoodman

Many thanks


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