My mother is thinking of giving my brother and I, a large sum of money (Potentially Exempt Transfer). However, right now I can make no effective use of the money.
Could I loan money to my mother after the gift (or before it) without it invalidating the P.E.T.?
Thanks,
I guess as long as this is documented correctly (i.e. it a genuine loan, with interest and repayment schedule, etc), it should be OK.
This is how 'Gift and Loan Trusts' work to some degree. Although these now get stomped on by the new rules if the amount gifted is higher than the nil-rate band.
I guess that this could be caught out by the 'gift with reservation' rules. i.e. you give away an asset but continue to enjoy a benefit from it (common example is someone giving away a property, but continuing to live rent free in that property - however, if a market rent is paid, there is no 'gift with reservation').
Therefore, if there is no documentation to prove that this a genuine loan, it could be viewed as artificial and could be assessed for IHT in the future ?
Some other posters may want to confirm whether I am on the right track here.
Rgds Neil
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