DEAR TRICIA
Need some practical financial advice? YOUR MONEY
Editor Tricia Phillips
and her team can help
QLast month my mother-in-law died and now my father-in-law would like to gift my two children £5,000 each. As he didn’t give his grandchildren any financial gifts last year, is this possible without affecting inheritance tax?
AUnfortunately, not for the whole amount. Your father-in-law could gift £3,000 for last year and £3,000 for this year – a total of £6,000. He could also gift a further £250 each, but only once. So any amount higher than £6,500 would become a potentially exempt transfer, and the seven-year rule applies.
QI have been with my bank for more than 40 years and I don’t receive any interest on my current account even though it has had a constant balance of over £10,000. Do you think that’s fair?
APersonally, I don’t. There are a few banks offering interest on current account credit balances, including TSB, Nationwide, Tesco and Santander. You’ll need to check the details – some require a minimum amount to be paid in each month and some charge monthly fees – so ensure it’s worth switching bank. There are also banks offering incentives to those who switch via the Current Account Switching Service. Or you could consider an instant-access savings account. They don’t pay earth-shattering amounts of interest, but at least you would get some return on your money.
QMy mum is thinking about taking out an equity-release plan. She has a small mortgage outstanding on her property. Can she apply for a certain amount of cash and can she make monthly repayments?
AThere are two equity-release options. The first being a Lifetime
Mortgage in which you take out a secured loan on your property. You can choose to ring-fence some of the value of your home and you can choose to make repayments or let the interest roll up. The second is a Home Reversion Plan in which you sell part or all of your home in return for a lump sum or regular payments. However, I suggest you contact a specialist in this area for full information. You can get a free copy of our guide to equity release, which spells out the basics, and the pros and cons, by calling 0800 232 1307.
QYou wrote about an investment bond that offered a good return and didn’t risk your capital, but I can’t remember the name or who it was from, and I can’t find any information about it. Can you help please?
AI think it might be the three-year fixed bond from NS&I at 2.2% in which you can invest up to £3,000. Or alternatively, Prudential offers its Prufund Cautious or Growth portfolios which offer expected growth rates of 4.5% and 5.1% gross, and you can add a capital guarantee at an additional cost. I would suggest you seek independent financial advice to ensure this product is suitable for you.