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Executors – don’t forget to investigate gifts

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Most people know that if you fail to survive a gift by 7 years it will form part of your estate.  It is likely that banks will co-operate with HMRC if the tax men are suspicious about whether gifts have been properly declared.  An investigation could follow that will be uncomfortable for executors and could mean additional tax and fines as well. 

If you are an executor and are not sure about whether substantial gifts have been made, the very least you should be doing is trawling through bank statements for the last 7 years or so.  A common misunderstanding is that if the deceased had survived a few years, but not 7, the inheritance tax would be reduced.  This can sometimes occur but very often it is not the case.  The rules are complicated and executors should take professional advice if they are dealing with an estate in which substantial gifts feature.

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