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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4879
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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When I married 23 years ago my parents gave me an antique necklace.

Resolved Question:

When I married 23 years ago my parents gave me an antique necklace. Because I have poor security in my house, I was keeping it in my parents' house, but took it away when my mother died a year ago (no one wore it but me). Now my father has died, and the executors of the will claim that it must be included in the value of the estate for inheritance tax, as it only became mine a year ago. Can this be right?
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Hello and welcome to the site. Thank you for your question.

Please clarify for me... do you have any proof to support your statement that the antique necklace was given to you at the time of your marriage..e.g photos, document or statement.

Many thanks
Customer: replied 1 year ago.

I am wearing it in my wedding photos. No other documents.

Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your prompt reply.

The fact that you were wearing it in your wedding photos should suffice.

You should go back to the executors and explain the whole scenario to them. The reason they want it included in the value of the estate is they think the necklace was your parents asset till a year ago and was gifted to you then. For inheritance tax purposes, all life time gifts upto seven years prior to death are regarded as potentially exempt transfers and added to the estate for IHT purposes to establish if the estate is below the threshold for IHT purposes.

You should satisfy them with proof of photos that the necklace was given to you 23 years ago and was left at your parents house for safe keeping only.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 1 year ago.

The executor knows perfectly well that it was given to me 23 years ago - he is my brother and does not dispute this. But he believes that to do the 'right thing' tax-wise it should be included in the estate. I really need to be able to prove to him that this is not the case.

Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your reply.

If your brother who is an executor knows that the necklace was given to you 23 years ago, then he is wrong in saying that it should be included in the estate.

Please look at the Gifts section of this guide here

https://www.gov.uk/inheritance-tax/gifts

Other gifts you make during your lifetime which don’t immediately fall into the tax-free list may become tax-free, providing you survive for seven years after making the gift. These are known as potentially exempt transfers or PETs.

Confirmation of this can also be found here under spend it or give it away

http://www.which.co.uk/money/tax/guides/inheritance-tax-explained/avoid-inheritance-tax/

I hope this is helpful and answers your question.

Customer: replied 1 year ago.

He believes that it must be included in the estate because I did not take 'full possession' of it. Is this wrong?

Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your reply.

Based on what you have stated, you had taken full possession of it. It was an outright gift to you on your wedding. You used your parents house for safekeeping. You could have kept it in a bank safe or locker but chose your parents house instead..

I don't agree with your brother's view.

I hope this is helpful.

Customer: replied 1 year ago.

I do not agree with my brother's view either, but what I really need is clarification of the law

Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your reply.

Clarification of the law can only be provided by a lawyer.

You will find that the lawyer would come to same conclusion that you had full possession of the necklace. keeping it at one place and not another for safe keeping does not make you lose that full possession.

If you are happy and there are no more issues I will appreciate if you would kindly rate/accept the service I provided to ensure I get credited for it.

taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4879
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 1 year ago.
Incidentally, what is the value of the antique necklace?

many thanks

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