More than half (54%) of over-55s who have given a financial gift in the last seven years have not kept any record of it, leaving families at risk of probate delays, says Canada Life.
Just over one in 10 (13%) reported keeping record of their gifts in a secure place, while 15% wrote down how much they had gifted in an informal place.
HMRC requires executors to complete forms to report the full value of an estate, with a separate form to disclose lifetime gifts, such as cash, property or shares made in the seven years before death. However, without clear, accurate records of these gifts, executors may struggle to complete the forms correctly which could cause delays in probate or increase the risk of queries from HMRC, Canada Life has warned.
The research also revealed confusion around how much money people have given away. Less than a third (31%) of over-55s who have given a financial gift in the last seven years know the exact amount they have gifted, while 45% say they could give a rough estimate and 24% have no idea.
Among those who knew the exact amount or could give an estimate, the average amount gifted in the last seven years was £42,056, with a fifth (21%) gifting £50,000 or more.
When asked the reasons why they didn’t keep record of the financial gifts given, nearly half (48%) said they didn’t give large enough gifts to worry. A similar amount (47%) didn’t know it was necessary, and a fifth (21%) said they were relying on memory.
Canada Life noted that individuals may be falling short of keeping records because they are not aware of what classifies as a financial gift, with 55% unaware that giving furniture, jewellery and antiques all count as a financial gift for IHT purposes. Additionally, 55% did not know that giving stocks and shares listed on the London Stock Exchange also counts and 32% did not realise that giving your house, land or buildings is treated in the same way.
Liz Hardie, tax, trusts and estate planning expert at Canada Life, said: “Gifting to loved ones can be hugely positive. However, if you do not keep a clear record of what you have given and when, you risk creating problems for your family later on.
“Poor records can mean your executors struggle to complete the paperwork once you pass away, and allowances and exemptions may be missed because they cannot be evidenced to HMRC. This can delay the grant of probate and therefore delay payments to beneficiaries.
“In the worst cases, if the will has not been drafted in the right way, these delays can leave a surviving spouse or civil partner without timely access to the funds they were expecting to live on.”
Hardie said reviewing HMRC’s forms will help people understand the level of detail required.
“Key information needed is the amount given, who you made the gift to, the date you gave it, and your relationship to that person. It should be filed in a backed-up place that your executor knows the location of.
“Inheritance tax can be a complex area, and seeking financial advice is essential to help you review your financial planning strategy and avoid any added stress for your loved ones later down the line,” she added.
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