Dear LPG

I have just learned something that I think that a few more people need to know.  I think that it is called the 7 year rule (that is what I have taken to calling it anyway).

I am now 85 years old and I suppose that I have done what many others my age have and ignored the advice of my children, who have spent a lot of the past fifteen years telling me to use all the money I have saved over the years to enjoy myself. 

I have never felt the need to get a huge Television or go on a cruise even though I would have no problem affording to do so and now I am wondering how best to make sure that my children get my money when I am gone. 

I know that the government will lay claim to a big chunk by way of inheritance tax  if  I still have it all when I pop my clogs, so I decided to start giving it away but I have learned that there are pitfalls if you do that too.

One of the biggest is the 7 year rule.  Did you know that if you give money to your children or other family members, and you die within seven years of doing so, they could be required to pay up to 40% of that gift back to the government in tax?  My research has just scratched the surface but I would advise LPG readers who have not yet thought about it to do a little research of their own.

I have been trying to understand the whole thing by taking a look on line and I would like to share what I have found but the way forward has to be to get some serious advice.

I am more than aware that even this information is no substitute for getting someone to really explain your personal options, but whatever you do, it is really something worth thinking about.

YW, New Cross

YW has given LPG the information that she has found on the subject but also advises that, face to face financial advice may be worth considering.  If you are going to talk to anyone about your finances,  it may be worth looking at our post entitled How best to let your money out of the pot, (►►►)  which, though generally aimed at younger pensioners, will give some valid information about finding reliable  financial advice.

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