Personal Finance: How do I move ISA funds between people?

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Swansea, UK: November 07, 2016: Close up of the new 2016 polymer five pound note with enhanced counterfeit resilience, showing the head of Queen Elizabeth II. It is resting on a calculator and another five pound note is underneath. - Credit: Getty Images

Reader question:

My dad died at the end of last year and my mum is both his executor and the sole beneficiary of his will. We’ve completed the probate application and have received the grant certificates now.

We’re now in the process of transferring all the assets into mum’s name.

Most of it has been fairly straightforward but I understand that we have to apply separately to have dad’s ISAs transferred over into mum’s own ISA fund. Can you explain how this works please?

MORE: Personal Finance: Is my job secure after being furloughed?Carl Lamb of Smith & Pinching responds:

There is a very specific provision for anyone who has ISA savings and dies leaving a spouse or civil partner.

Where this happens, the surviving partner can take advantage of an inherited ISA allowance equivalent to the value of the ISA held by the deceased partner, irrespective of who inherits the ISA assets.

This enables the surviving partner to invest up to that value into an ISA without using the current year’s regular allowance.

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This inherited ISA allowance is known as an Additional Permitted Subscription (APS) and can only be claimed by the spouse or civil partner – so not by co-habiting partners – if they were still living together and not legally separated (or about to be) when the ISA holder died.

It’s important to stress that the ISA savings themselves don’t actually have to be left to the spouse or civil partner for this allowance to be claimed by the surviving partner.

In order to get the APS, your mother will need to get a form from the ISA provider and complete it with details of your father’s death. This will need to be sent to the ISA provider along with a copy of the Grant of Probate.

If your father had ISAs with different providers, then you can register the appropriate APS with each provider – often the easiest route – or transfer the total inherited ISA allowance to a specific provider.

The allowance is available to your mother for either three years after your father’s death or 180 days after the administration of the estate has been completed.

Do talk to an independent financial adviser about how your mother should invest her inheritance. It may be that the ISA investments she has invested from your father may not be suitable for her attitude to risk, for example, so it’s important to make sure they are right for her.

When she is ready, a full financial review would be helpful to make sure that her current needs are being met and that the arrangements in her own will are still both tax-efficient and what she wishes.

Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.