Interesting IHT/loan question...

That is probably going to be the key.

I am not really leaving anything out which I think is relevant.

I am just sussing out the risk picture.

One problem I can see is that if upon death the estate is worth say 50 grand below the IHT threshold, then anybody wanting to sh*t stir could tell HMRC about the 100 grand loan.

But if the loan is more than 6 years old on death, which it probably will be, and the old girl never asked for any repayments, it cannot be due anymore, so it cannot be a part of the estate.

Reply to
nobody
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No - it did not become a "gift" - it became a written off loan on which 'A' defaulted [apparently from the outset] in his repayments. Assuming that the default becomes 6 years or more overdue, then the debt becomes irrecoverable.

Byt the way ..... I'd like to see someone convince a bank that when they write of a loan to a defaulter, it becomes a gift !!!

Provided (at/after the woman's death) both 'A' and the executors of the woman's estate can agree that the debt is more than 6 years old, then the estate cannot enforce repayment of the loan - or even obtain an unenforced judgement etc..

I imagine that this won't be too difficult for 'A' to agree to ..... otherwise he'll face the prospect of having to pay the loan back to the estate of the deceased woman. The chances are that both 'A' and 'B' will be the executors.

As it's not a gift - but a defaulted and written-off loan - this does not apply.

Reply to
Richard

So, if I know I'm going to die in a year's time, I can make a loan to someone which I know they'll default on, and that amount will no longer be part of my estate for IHT purposes - right?

I don't think so, somehow! I have a feeling that HMRC might just not view it like that.

Reply to
Roger Mills

It's a matter of intent. If the transfer was intended to be a loan to be repaid, then it's a loan.

If the loan has legitimately been written of as a bad debt *before* senility->death, then indeed it's a written off loan

They will if you're Vodafone :-))

Reply to
Richard

So how do you prove "intent"?

Reply to
Roger Mills

Debts remain in existence; it is only the right of the creditor to commence a court action that ends on the date set in the Limitations Act. So in this case an executor could perform an offset between a very old debt and a legacy (unless, as it appears, the debt was forgiven and made into a gift).

Reply to
Anthony R. Gold

Debts remain in existence; it is only the right of the creditor to commence a court action that ends on the date set in the Limitations Act. So in this case an executor could perform an offset between a very old debt and a legacy (unless, as it appears, the debt was forgiven and made into a gift).

- Reposted because first attempt mis-quoted.

Reply to
Anthony R. Gold

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