Inheriting from a child
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Yarders
Posts: 6 Forumite
in Cutting tax
Not the most jolly title, and for that I apologise. A bit of background required; firstly, our son is alive and well! He had an incident at birth and has recently won a clinical negligence case and is in the process of buying a house in which we will all live. As part of the trial, experts assessed his life expectancy (a fun letter to receive of a morning.....) and there is every chance that we will outlive him.
I am aware, if not entirely conversant, with IHT, but every example I can find talks about children inheriting from parents and not the other way around. Due to the size of property needed, and the area we live in, the value of his estate will be substantial. This will mean a massive tax bill should the worst happen, one that we couldn't afford.
His money is controlled by a court appointed deputy and he is saying that we can't be put on the deeds of the house, which I think would reduce the amount being inherited. We only want to ensure stability for our other children because as it stands we will have to sell up and pay a massive bill purely because of the situation we find ourselves in.
Can anyone offer advice that could help? Many thanks
I am aware, if not entirely conversant, with IHT, but every example I can find talks about children inheriting from parents and not the other way around. Due to the size of property needed, and the area we live in, the value of his estate will be substantial. This will mean a massive tax bill should the worst happen, one that we couldn't afford.
His money is controlled by a court appointed deputy and he is saying that we can't be put on the deeds of the house, which I think would reduce the amount being inherited. We only want to ensure stability for our other children because as it stands we will have to sell up and pay a massive bill purely because of the situation we find ourselves in.
Can anyone offer advice that could help? Many thanks
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Comments
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Is the money his or in a trust?0
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http://www.prd.uk.com/application/files/1614/8725/9763/A_Guide_to_Property_Purchases__Adaptations.pdf
May be worth a look.
Take professional advice.0 -
He is only 11, and there is a court appointed deputy looking after his money, so I believe it is his.0
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He had an incident at birth and has recently won a clinical negligence case and is in the process of buying a house in which we will all live ... there is every chance that we will outlive him. ... the value of his estate will be substantial. This will mean a massive tax bill should the worst happen, one that we couldn't afford.
Note that it is your son's estate that will owe the tax, not you. If there are not enough liquid assets in his estate to pay the IHT bill then presumably his executors/administrators will have to sell the house.
I don't understand this bit.Due to the size of property needed, and the area we live in, the value of his estate will be substantial.
Surely the size of his estate depends on the amount of money he was awarded by the court, plus any subsequent growth in assets, not on the local housing market. Or do you mean that the size of the award was designed to reflect local property prices?Free the dunston one next time too.0 -
[Note that it is your son's estate that will owe the tax, not you. If there are not enough liquid assets in his estate to pay the IHT bill then presumably his executors/administrators will have to sell the house./QUOTE]
Surely this amounts to the same thing?don't understand this bit.
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Due to the size of property needed, and the area we live in, the value of his estate will be substantial.
Originally posted by Yarders
”Surely the size of his estate depends on the amount of money he was awarded by the court, plus any subsequent growth in assets, not on the local housing market. Or do you mean that the size of the award was designed to reflect local property prices?
A bit of both. The house with adaptions will be quite large and worth more than it cost to complete, then it will only increase in value over time at a rate greater than any increase in IHT allowance. Ultimately it boils down to the same thing, a large tax bill and more than likely, our house being sold from underneath us.0 -
it is only "your" house in the sense that it is where you live. It appears that your child will have paid for it and legally it is his house, not yours.. Ultimately it boils down to the same thing, a large tax bill and more than likely, our house being sold from underneath us.
as it appears you do not want (have not been allowed?) to pay anything towards the house at the moment, the court deputy is quite correct in saying that your child cannot gift an ownership share to you, as such a gift is not in the child's best financial interest.
if you are unable/unwilling to buy the property from your child's estate when the time comes in order to inject enough cash into the estate so that the estate can settle its tax bill, then yes, you will probably "lose" the house, as it will be a significant portion of the estate's assets and thus have to be liquidated to settle up.0 -
it is only "your" house in the sense that it is where you live. It appears that your child will have paid for it and legally it is his house, not yours.
as it appears you do not want (have not been allowed?) to pay anything towards the house at the moment, the court deputy is quite correct in saying that your child cannot gift an ownership share to you, as such a gift is not in the child's best financial interest.
if you are unable/unwilling to buy the property from your child's estate when the time comes in order to inject enough cash into the estate so that the estate can settle its tax bill, then yes, you will probably "lose" the house, as it will be a significant portion of the estate's assets and thus have to be liquidated to settle up.
Maybe a bad choice of phrase in 'our house', but I simply mean where we all live as a family.
Having just re read my original post I think I should have made myself clearer. Are there any differences in inheritance from child to parent? And if not, are there any ways to reduce IHT?0 -
Save the money you are saving from not having a mortgage or rent to either buy part of the property in the future or pay any tax bills when they come.
Why can't you buy into the property now?we will have to sell up and pay a massive bill purely because of the situation we find ourselves in.
that massive bill will come from the profit in the place and you won't need somewhere as big or adapted.0
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