inheritance - I now own 1/4 of a house.

jamescredmond

my father died last yr and he bequeathed 50% of his house to myself and sister. my mother continues to live in the house. they were 'tenants in common' and the bequest stipulates that the property remains as the principal residence of my mother and that no claim (be me or sister) be made on the property until our mother's demise.
sis and I taked about said bequest and have decided not to register our ownership rights with the land registry. there is no timescale on registration (we could leave it for yrs ) and we trust each other implicitly. both of us are financially secure.
my question is simply this: me and sis are married with children. given our father's will and the terms, should we engage a solicitor to tidy this matter up (and pay handsomely), or should we not bother (given the terms of will) and wait until our mother passes on?

I'd be interested to hear any comments on this!

Primrose

I'm not a huge believer in lining the pockets of lawyers, especially if you're in a family relationship where you impicitly trust each other.
However, if either you or your sister were to die and your estates had to be sorted out, having some unregistered assets might complicate the matter. Also I think you have to bear in mind that as your mother grows older, she might at some point reach the stage where she needs to go into residential care. At that point, the registered ownership of the house in which she is living could come into question if there's an issue of funding her care costs. If your joint ownership had been registered well in advance of such an event happening, it might cause less hassle to have everything in "black and white".
On balance, I'd go the legal route. If your mother ever reaches that stage, you will both have enough worries on your plate coping with getting her sorted out without concerns about battling with local authorities about funding care costs and legal ownership of a property.

Clive_Woody

jamescredmond wrote: »

me and sis are married with children.

You do realise that outside of Widnes marrying your own sister is illegal!!!

Jake'sGran

We did our wills last year, very similar to your Dad's. Our daughter will own half the house when the first parent dies (likely to be me as I am in poor health) but her Dad can stay in the house until he pops off and then she will own it all. Our son will be getting a lump sum (various reasons why we did it this way). This sounds a trifle vague but I seem to remember that if our daughter predeceases the first parent to die her children will own the first half of the house and then the second half on the death of the other parent. I was worried about inheritance tax but it is no longer an issue with the changes in the budget last year....and.... the reduction in investment values.

Robert_Sterling_3

Clive_Woody wrote: »

You do realise that outside of Widnes marrying your own sister is illegal!!!

Nice one Clive

Robert_Sterling_3

Do you need a solicitor.
Could you not send a copy of the Probate Certificate to the Land Registry and ask them to make the amendment.

There are some inheritance tax issues here which I assume that you know about.

Sillychuckie

Just a side note, in case you hadn't thought about it.

You and your sister each own 1/4 of a house. You and your sister are both married. Therefore, you and your sister (and your spouse), each own a 1/4 of a house.
i.e. Your husband owns 1/8th of this house, and you own 1/8th.

Should your marriage break up, or your sisters marriag break up, the divorced partner would have a legal claim to 1/8th of this property, even at the risk of your mother losing her home (should the other parties be unable to buy out the divorced partner entitled to 1/8th).

If this concerns you, you might want to investigate how to guarantee that your mum will have 100% legal ownership (and right to live in) the house for as long as she wishes to.
Currently, that is not the case should certain circumstances change.

Your fathers will stipulation that 'you only get your 1/4 when your mum starts her demise' is, I believe, irrelevant.
You and your partner own 1/4 of this house. Whether you register your details with the land registry is another matter entirely.
The tenancy in common has advantages with inheritence tax, but also raises these other issues.

SC.

harryhound

I have no legal qualifications what so ever BUT it sounds to me as though your father meant to create an "interest in possession trust" (some times called a "life interest trust") with your mother as beneficiary.

This just means that a legal entity called a trust owns the 1/2 of a house until your mother dies. As the tax law stands at the moment it has two advantages.
1. The value of 1/2 the house has been "given" to your mother and does not count as a disposal for inheritance tax purposes (since autumn 2007) from your father's zero rate band of Inheritance tax (IHT), probably leaving it available for the second death. (you really need to post the exact wording of the will).
2. Should the very worst happen (about a 10% chance) and your mother ends up demented, not knowing who she is, the trust would not be obliged to keep her at say 750 GBP a week if it chose not to.

If the 1/2 house has been given to you both absolutely, and the requirement to keep it as a roof over your mother's head is only an expression of a wish rather than a command, then any increase in its value could be potentially liable to Capital Gains Tax (CGT) and its value has been taken off your father's IHT zero rate band (currently 312,000 GBP).

There is little logic to tax, it is just a jumble of arbitrary politically inspired rules, and it can change at any time; that said I had a grandmother who was cared for by an aunt:
Grand mother's will said the aunt became a furnished tenant paying 1 GBP per year in rent, with a life time right to renew her tenancy. [ don't ask me why but probably some solicitor thought it was a good wease at the time the will was written 40 years ago:eek:] I inherited the responsibilities of "landlord" for many years, but when auntie eventually died the house was worth roughly 250K and autie's nest egg was down to 20K and the zero rate band for IHT was 250K, so I said to the tax man
."I recon that, regardless of what the will says, this is really an interest in possession trust".
"Yes let us treat it like that" [and I will charge autntie's IHT at 40% on 20K rather than a whole lot of hassle about calculating the CGT on 250K, when the house is sold].

There is a big thread on here somewhere about saving IHT. send a personal message to some of the professionals who have posted on that asking them to have a look at this thread.

You do need to understand all the wrinkles and options (eg suppose one of you move in to look after mother !?!).

Good luck

Harry

Here is the thread, remember that Gordon Brown changed the rules about inheritances between husbands and wives (and other legal unions) in autumn 2007, when spooked by the Tories suggesting a zero rate band for IHT of 1,000,000.
http://forums.moneysavingexpert.com/...ighlight=Trust

You do need to get on top of this quickly as you have a right to re-write the will (sometimes called deed of family arrangement) if the beneficiaries and executors can agree the changes.

Willman_2

The most important distinction to make here is that half the house is in trust, you do not own it (as long as the Will was written properly). It will cost no more than a few hundred pounds to formally set up the trust and change the ownership of the property on LandReg.
If you wait until Mum goes into care there are likely to be more problems and potentially a claim for deprivation of assets by the Local Authority.

Robert_Sterling_3

Oh what a tangled web we weave
When we try to minimise our tax.

harryhound

Oh what a tangled web our government weaves when trying to rob folks of their inheritance without them realising until it is too late.
This country is choked to death by tax rules, so the government can give billions of our money to fund bankers' bonuses, not to mention desert wars and inflation proofed pensions, for some of their employees who have never "produced" anything in their lives.