It's not a Crime Exactly...

Dear Sirs,?

I was in an accident two years ago. I am thus disabled. I’ve got some ￡350,000. My mother is planning to give me ￡300,000 to put towards buying a house. The total value of the house is ￡650,000. We’ve heard all sorts of advice, should she give me the cash, should she put a charge on the house, and I’ve heard of the protections of a trust. Put me out my confusion, what would you advise??

Clarence.?

Herts

Protect Your Inheritance... Start Now

Dear Clarence,?

At the turn of the century, there was talk of rebuilding Wembley Stadium.?

I was one of the handful who objected to the erection of this edifice.?

I saw no need for the expenditure of taxpayers' money on an unnecessary project.

A Grand Day Out?

My neighbours, in Wallington, just inside the M25, could have breakfast, saunter to the local railway station at the noon hour, and for the cost of a one-day travelcard? - travel to and from Wembley stadium, they might buy matchday memorabilia, buy overpriced pies and drinks, perhaps even retire to a local hostelry, but they’d be back home in time for dinner. All told, a grand day out.

A Horse of a Different Colour

?For football followers further afield, the cost of such a day out is a horse of a different colour, and for many, an overnight stay might even be necessary. I was one of the few who saw scant sense in a national football stadium in London. I was of the mind that all footie fans all across the land had the same right as my neighbours and I did, to see international football without long, sometimes less than pleasant journeys at fantastic expense. We’d simply hold our international matches at grounds down and up the land. Indeed, major footballing powers such as Germany, Brazil and France play their home matches the breadth and the length of their respective countries.

No Need for Waste?

And, we did. When Wembley was closed for demolition and rebuilding, the nation’s football team played 34 home games. These games were held at 14 different grounds. I proffered this as proof there was no need to burn taxpayers’ cash on the new arena. I was scorned.

Belongs to Everyone

Mark Perryman who spoke for the England Supporters Club, professed that taking the national team to the provinces was a capital idea. He observed: ‘It was welcomed by fans, the players, by local communities, local authorities and by the media. It was a real opportunity to turn an England game into a local game. That was the great success of it.' He further mused: "It was a very powerful statement that said the national team belongs to everybody not only in London and the south-east,"

Mr Perryman was ahead of his time, long before it was fashionable, he spoke a certain common-sense the style of which is apt to be jeered at as it’s now recognised as inclusivity.?

But witness: the events of the unfortunately not so well heralded Euro 2022 were contested at grounds small and large up and down the land. It was only after the nation’s team was wreathed in victory that all but the devoted football fan heard of the ladies’ exertions. Indeed, in cricket, we play our matches across the nation, we even play England matches in Cardiff.

Squandered Opportunity?

The football authorities in rebuilding Wembley, squandered an opportunity of gold to make the whole land feel they were represented at these events.?

Your mum in putting ￡300,000 towards the purchase of a house for you has a fine opportunity to reduce the tax payable on her estate.?

Estate planning is simply the art of arranging your affairs so the parties of your choice, and no one else, benefit from your wealth. One of the parties in our sight are the HMRC. At the risk of putting words into her mouth, I suppose she would rather her wealth, which she has accumulated slowly and by sacrifice, stayed in her family rather than be wasted in tax payments, after all, you know as I do that what they don’t waste on such unnecessaries as Wembley Stadium, they steal.

The Ugly, The Bad & The Good?

I take ‘give you the cash’ to mean that she’d give you the tranche of cash absolutely. I wouldn’t advise this. I’m no expert on social security or local authority benefits, but ownership of considerable asset such as you contemplate might render you ineligible for means-tested benefits.?

As a charge is simply registering a debt against the property – she would be lending you the money to buy the house. If she put a charge on the house, on her death or on your passing, the charge must be removed, a prior and necessary step would be repayment of the ￡300,000 to her estate. All things being equal, the repayment of the debt would attract inheritance tax of ￡120,000.

Squandered Opportunity?

Your mother, by offering you this wedge of cash to buy this house has weaved of threads of gold, an opportunity to remove ￡300,000 from her estate and reduce her family’s inheritance tax bill by ￡120,000. She simply puts the cash in a trust of which she is not a beneficiary, in the jargon, a non-settlor interested trust. The trust becomes part owner of the house. If she survived the gift by seven years, the ￡300,000 would have fallen out of her estate. Going by the path you describe in your question would be to erect a low ceiling, that constricts your mother’s opportunity to keep her money in her family.?

It would be a shame to squander such an opportunity.?

?Such failure to protect the fruit of one’s labours is not a crime exactly, one can’t be sent to prison for it, but, it’s such a terrible shame.