An aunt recently gifted my friend some money to buy a house (she will still use all her IHT allowances but is somewhat illiquid). The aunt is now seriously Ill so my friend would like to find a way to transfer the money to the aunt so they can use some or all of it to help with medical expenses.
If friend gifts the money I believe there is a risk of double IHT taxation if aunt does within 7 years.
What about if he loans the money back to the aunt?
1. I believe there is a provision to prevent the gift and loan back strategy to avoid the initial IHT charge (s103?)
2. But am I correct a loan back would avoid the double IHT charge because of s104c?
3. What happens if he loans the money and the aunt actually survives 7 years from her original gift?
4. Is there a way to avoid both IHT charges ? e.g he pays for the medical fees directly? Only pays it back in installments to cover known liabilities? Any other ideas?
Thank you for your help!
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