I found this amusing because he says, as if it is the objective truth, that inheritance tax is the most resented tax that he encounters. However, the fact is that it is still paid by fewer than 5% of estates in the UK. All he is actually saying then is that, amongst the people who go to his organisation to find ways to avoid paying inheritance tax, inheritance tax is the most resented tax.
That, of course, does not mean that it is the most hated tax within society, or that it’s even hated very much at all. It simply means that he is forming his opinion based on an incredibly biased sample.
And the evidence is that this must be the case.
Yes, very good. Opinions on IHT are regularly polled:
Err, yes, the Great British Public do, on this evidence, think IHT is the most unfair tax.
What a surprise, Spud doesn’t understand that people are aspirational and can imagine how they would feel if the earned enough to be subject to IHT.
Having become convinced that the Left are prone to psychological disorders-“queers for Palestine”- I’ve decided that if you have the sort of brain that can passionately think six different things before breakfast, many of which are mutually exclusive, you are liable to slip into a world where facts only matter if they endanger your life and the brainstem is the only part that functions properly to preserve your existence…
Tosser. My estate won’t have to pay IHT because everything will go to my widow. Her estate will unless Care Fees have scooped an awful lot. Thereby 5% is more like 10%.
But stay! Consider economic incidence – when my widow dies her beneficiaries are the people who will lose wealth by virtue of IHT. So multiply by the number of them. Thus far more people are affected than he lets on. Tosser.
I think you’ll find that most people’s attitudes are as follows:
1. I know best how to spend my own money.
2. I’m very happy for the government to give me money, because I know best how to spend it.
3. I’m not terribly interested in where the government gets its money from, so long as it’s not me.
4. Oh, and I want loads of free stuff from the government too, like roads, the NHS, stuff like that.
As BiND points out, collectivist lefties forget (or despise) the fact that people are aspirational. People have also become wise to fiscal drag. Plenty of people no-one would call “rich”, or even “affluent”, will end up in danger of paying IHT as a consequence of inflation-driven corruption of the currency.
In the US IHT has consistently been viewed negatively by a wide margin, even when the threshold for it is much higher than the vast majority are likely to reach. I think this is because damn near everyone hopes to bequeath something, hopefully something significant, to their children & grands and they can relate to others who wish to do so.
You’re rich and don’t want to pay more in taxes = selfish.
You’re rich and want to leave $ to your kids & grands, of course you do.
Maybe we should design a government that doesn’t take death taxes off us.
Realistically most of it will then go to the kids tax free.
And which doesn’t subsidise child care, pay child benefit, schools beyond aged 16.
I have never been arrested or jailed simply for being a pale male but I would think it extremely unfair if I were. Frequency and degree are not at all the same thing. Tater’s use of the word “fair” is in this case entirely valid.
Some portion of the resentment is likely because an estate subject to inheritance tax is money that has already been subject to tax when it was earned.
Canada at least doesn’t have one, though we have lots of other things. The rule here is that when you die, all of your estate is taxed as if you sold it at the instant of your death.
There are probably exceptions for spouses; I don’t remember them as I haven’t had to deal with that. But even then, the spouse dies and that gets taxed then. I also don’t know what happens if there’s a chain of spouses; they’ve probably thought of that.
The remainder doesn’t have another tax on top before being distributed.
Mind you, if the estate continues long enough before being wound up (which is usual since you have to wait long enough for any claimants to come forward), there may be more income which will be taxed. But that’s not inheritance. The money gets taxed once.
IHT is also the tax most attempted to avoid. Which is why the take is so pitifully low from the really rich.
Seriuosly there are tens of multi billionaires dying in the UK every year, yet the total IHT take is about £6bn.
Most of it is actually collected on estates of less than a few million, around the point where you start to see its worth paying proper money to shysters and spivs to avoid it.
In short, Lefties never seem to be able to understand that we’re not all envious thieving little shits like them.
The reason why I hate IHT is that EVERY estate has to jump through hoops to satisfy HMRC that all IHT due (which is ZERO for 96% of the cases) before the executors can “obtain probate” and carry out the wishes of the deceased. That typically takes 3-6 months but can take years.
Meanwhile the executors are required to pay assorted bills out of their own pockets (banks will often pay the funeral bills and deduct it from the deceased’s account – if there is more than enough in it – but the paper bill, the grocery bill, rent until you clear out the house/flat …). As the husband of an executor of an estate that was not, in fact, liable for a brass farthing of IHT I was over £5,000 out-of-pcket before we obtained probate and my sister-in-law was also significantly, albeit rather less, out-of-pocket. If I had not had substantial savings we should have been in a right mess.
In took five years to wind up my mother’s late husband’s estate, and most of that was waiting for the local social services to sort out their accounts and admit there were no debts owing to them.
Really? My brother-in-law was executor for my father-in-law’s estate – he just paid the bills with the money in his dad’s account. If there are no liquid assets, maybe I can see it – but even then I think it unlikely.
dcardno:
When my father passed my sister and I were the executors. He had money in a bank account, so the bank converted it from his account to the estate’s, and things like the condo fees could be paid from that.
But that money ran out while we were waiting for probate. Since after all, the money in the account was coming from a combination of pension (stopped when he died) and withdrawals from the RIF (also stopped since it became part of the estate).
So there wasn’t enough to pay for IIRC six or so months of condo fees plus property tax plus electricity etc. And of course we couldn’t sell the condo (which eventually we did) until we got probate.
So yes, we were out of pocket by the time we could start distributing the estate. It’s not that uncommon. Fortunately we did have the financial cushion to do that.
As it stands we got probate relatively quickly. The lawyer we hired said that it could take literally years for some estates in that jurisdiction.
@ dcardno
Technically, the bank should not have permitted that. The executors can start administering the estate *from the moment that probate is granted* which is when the law recognises that they have a right and a duty to deal with the deceased’s assets and liabilities. Even paying for the funeral is a gesture of goodwill by the bank.
Not that I’ve looked into this, but what’s the situation when your executors also have Lasting Power of Attorney for both financial and health? Does that evaporate on death?
@ dearieme
Do you have family (or friends, or dogs home, or whatever ?) you intend leaving the estate to eventually ? Consider rearranging your affairs to minimise what the local council can take (which by default is everything until the entire estate is down to £22k IIRC) in care fees. But you have to do it well in advance or you can end up being assessed as having money your don’t actually have and have to pay care fees out of that money you don’t actually have … but I’m digressing.
In the absence of a will, as you say, if you pop your clogs first then everything you have goes to your widow. What you can do is leave your half of the estate in trust to the kids, and your wife leave her half in trust to the kids. SO when you pop your clogs, your half of the estate goes into a trust, and your wife only owns the half she already did own. So the council can only take care fees until your wife’s share is down to £22k and your half is normally untouchable. The house needs to be held as “tenants in common” rather than “joint tenants”.
In addition, such an arrangement also protects against remarriage. If your widow were to remarry, then any will becomes invalid, and the intestacy rules come back into play – so potentially you could die, your share of the etstae go to your wife, she remarries, then when she dies everything goes to the the new husband and nothing to your kids. With the trust arrangement, your half is protected from that.
I believe a phrase in the trade refers to “tax, care homes, and toy-boys” as the three main ways your kids can end up with nothing.
Also, when leaving to kids, there’s a technical term (issue ?) which essentially means “or their kids, or their grandkids, or …” When someone I know died, he’d left his half of the house to his partner’s daughter – his partner had left her half in trust. Unfortunately, the daughter died a few weeks before he did so that part of the will failed – and his partner’s three grand children were a bit upset not to have inherited the whole house.
IANAL, so take advice from someone who actually does know this sort of thing.
While we’re on the subject of wills, I’ll repeat the public service broadcast I made a few years ago after playing golf with a specialist in helping executors.
Never, ever, leave a percentage of your estate to a charity, especially the large international charities. They have offices full of lawyers who will drive your executors crazy ensuring they get every last penny they are owed even if it means a smaller pot because of increased solicitor fees dealing with them.
If you must leave them some money make it a fixed amount.
That said, I don’t think many on here would leave money to those sorts of charities.
Norman,
We went through all this earlier this year when we redid our wills: Lasting powers fall away on death even for the executor.
And another replay of a PSB: make sure someone has lasting powers of health otherwise the local council gets to decide which home you go in to if you have a problem not your family and it won’t be one of the cheaper ones, they reserve those for when they are paying.
M – yikes, what a mess! I suppose we were lucky; Stew had lots of liquid assets (and not many cash needs), so we didn’t run out.
Probate took a long time – he had shares in a US company from an employee stock option plan – there was maybe $7K worth of stock, but getting Compushare (IIRC – share registrar) to release it was a nightmare. I called them, and was told what forms to fill out – I would fill them out, send them in, to get a call that these wee the wrong form (mainly IRS W-8s of one flavour or another). This new caller would tell me a different form was needed – or that we needed Stew’s signature (tough when he’s been dead for three months), or that there were no forms for transferring the shares to an estate, or that was the right form, but it had been filled out incorrectly. It took almost a year, and was just maddening.
dcardno:
In our case, it wasn’t too bad. By which I mean it could easily have been much more work than it was.
– Only a few beneficiaries, all equal.
– No spouse (my parents had long since divorced and settled that).
– Significant assets were a condo, and a portfolio held in a a bank, mostly of ETFs of various sorts. The real estate meant we had to seek probate which delayed things. In Canada you don’t have to unless there’s real estate or a total estate of significant size.
– the bank allowed us to convert the portfolio to cash even without probate, once we showed the death certificate. Which simplified the tax situation. The estate gets the step-up in basis from the deemed sale at time of death, but then there can be more gains unless you convert to cash, which of course get taxed. And of course you have to keep filing returns as long as there’s movement.
– The jurisdiction at death was Toronto, which is a large city. So I guess a lot of people with large estates die there, which ties things up.
In the USA, it’s mostly a theoretical argument.
For federal tax, our base inheritance tax exemption for one person is $14,000,000.00. Double that for a couple. My state also takes its pound of flesh, with a much lower tax rate but with a single exemption of $3,000,000.00. Most don’t worry about it.
(Durable (lasting) power of attorney is durable through incapacity, but ends at death. )
@ dcardno
I suspect that you mean Computershare, of whom my opinion verges on the libellous
Response to your article on MMT:
https://new-wayland.com/blog/why-banks-pay-interest-on-deposits/
That’s how the rate is determined, yes. But it doesn;t explain why the deposit is necessary if all a bank does is create money when it lends….
John77 – Right you are: Computershare. The same question got a different answer every time it was asked, usually with an air of ‘isn’t that obvious you idiot?’
Bobby b – we are in BC, and we had to obtain probate; while Stew had lots of liquid assets, his major asset was his house.