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  • 4 Oct 2023

    Mitigating Inheritance Tax | Why you should get advice

    The recent case of Norma Gibbons and Dawn Gibbons highlighted the fragility of relationships and thus just how important getting advice when making decisions about your future are.

    Background of the case

    Prior to Dawn becoming a mother, she and her mother, Norma, lived together in London. The relationship turned sour when they entered a battle regarding the property’s ownership. 

    Dawn was accused of coercing her mother into transferring the property into her daughter’s name. This was done back in 2004 as a gift with the main purpose of avoiding inheritance tax. 

    Now, 83-year-old Norma is being evicted from her home after the Judge ruled in Dawn’s favour, concluding that the property had been legally gifted to her daughter and no longer belonged to Norma.

    What went wrong?

    It was shown during the case that Norma had gifted her share in the property which was previously in joint names with Dawn, into Dawn’s sole name. The aim of this was to remove the tax burden from Norma’s estate. And was done with consulting Dawn. 

    After an altercation with Dawn’s young child, Norma made false complaint calls to police, harassed her daughter, deliberately damaged the property and refused to let work be carried out to fix any problems. This ultimately resulted in Dawn seeking the help of the Court in the form of Court Orders. Norma ignored these. 

    After exhausting all her options, Dawn had no choice but to pursue matters through the courts. 

    When this didn’t end the torment from Norma, Dawn served an eviction notice on her mother.

    What does this teach us about mitigating inheritance tax?

    This case highlights the importance of estate planning, getting expert advice, and taking careful consideration when making significant decisions regarding both financial and emotional impacts.

    Whilst ‘offloading’ assets to the next generation may seen like a good idea, the legal implications of doing so must be properly understood and considered. Seeking tax advice is also recommended to ensure that all possible impacts have been discussed. 

    This case serves as a warning to anyone wanting to mitigate tax by offloading their assets. They didn’t get proper advice and this resulted in the arrangement, and a family relationship, breaking down. 

    However, this does not mean that it isn’t possible to do successfully. With the right legal and tax advice, proper arrangements can be put in place, protecting yourself and your loved ones for the future, whilst being tax efficient.  

     

    If you need tax advice or more information about inheritance tax, contact our Tax, Trust & Estate Planning Specialist, Tom Moore.

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