Inheritance Tax

mary

Since I started this post, I thought it was about time to revisit it!

Eventually I contacted the Inland Revenue Inheritance Tax Helpline. Not necessarily a good idea! The gentleman told me that if I did a Deed of Variation on my Mum's will (still within the time limit) and pass her house on to the kids, I would not be able to take the income from renting out the property. In short you can't have your cake and eat it. You are not allowed to benefit from it. Now the plan was and still is to keep the house so that it will provide me with a pension as I will have no other form of pension other than the State Pension, for what it's worth.

Incidentally there is obviously no mortgage on my Mum's
house and we only have three years to go on our own.

A passing thought - what is to stop me from removing my name from ownership of our marital home (on the assumption that hubbie will not show me the door!) and appear just to own my "Mum's" house. That way, hubbie will have about £280,000 (house price rise over the year) and I will have about £240,000 + cash of some £50/60K. That way both of us would be more equally near the nil rate IH band of £263,000. Then we can both leave our respective bits to the kids and pay minimal tax.

I did look at these online will writing services, but got the feeling it was somewhat like a multiple choice exam paper, maybe wrong.

As regards my cash, we will in the process of time have 6 weddings, 2 have finished Uni + the next one is about to finish all with £14 K debts. I could feel generous and get rid of some that way. I know you are allowed to gift a certain amount each year.

If only we had a crystal ball and knew just how many years we had left on the planet, then we would know how to divide up the cash in the pocket, enjoy it, give some to the kids and give the tax man zero!

Any thoughts?

Robert_Sterling_3

You do not need to remove your name from your house.
If you are Tenants in Common it is already OK
If you are not then change from Joint Tenants to Tenants in Common.
Each have a will in which you leave the "Amount of the Nil Rate Band for Inhertance Tax Purposes to your children" ( Needs saying using the appropriate legal phraseology.)
Your mothers house ... Keep it  ... Rent it out.
You may pay capital gains tax on any future increase in it's value.
The survivor of you and your husband may be able to vary the will of the deceased partner with the agreement of the children.

The government at present is happy for a married couple to make use of two nil rate bands rather than one. So half a million plus escapes the tax if you play your cards right.
Having two nil rate bands rather than one saves approx £100,000 in Inheritance Tax.