Wills and Inheritance tax

Confused2010

CLAPTON wrote: »

tells us the assets of your parents

-value of properties and who owns then (him, her, jointly ) ..include the property they live in
-othere assets, savings etc and again how are they owned?


probably the best thing is for him to make a will that leaves everything to his wife

If you and your brother 'add' your names to the deeds of the houses then there will be an immediate Capital gains tax liability AND you are likely to be liable for IHT if he dies wihtin 7 years (a very bad deal)

property1: 300k
property2: 380-400k
Commercial: 250k
Business: £0
Place they live at the mo: Rented...Income from business used to cover that. Property itself is in the city but it's not theirs so not their asset

all in joint name of mum & dad

Cash: 50k+: as above


Edit: Leaving to mum is best option me thinks

CLAPTON

certainly leaving everything to mum will avoid any tax issues

but he needs to draw up a will asap as otherwise the intestancy rules will apply

see
http://www.hmcourts-service.gov.uk/infoabout/civil/probate/why_will.htm
(make sure you page down to read the rules after February 2009 )

Biggles

CLAPTON wrote: »

certainly leaving everything to mum will avoid any tax issues

Only from the father's death, IHT would still be payable upon the death of the mother.

That could be avoided (or partially avoided, should he die within 7 years) by gifting one of the houses (or shares in the houses) but whether CGT would then be an issue would depend on the change in the house values since they were purchased.

cos69

If your mother is in good health, I would suggest your father transfer the most expensive of those properties into her name. She can then gift that to you and hopefully survive for 7-years. The transfer from her to you might incur some capital gains tax on the increase in value of the properties from when they were bought; but this is likely to be less than inheritance tax.

He can then leave you the other property in his will; this being less than the inheritance tax allowance and the rest goes to your mother free off tax.

Check that out with a solicitor who can also draw up the will, transfer the property

CLAPTON

Just at add; the conservative party have promised to increase the IHT allowance to £1m (or effectively 2m for a couple) so depending upon whether you think they will win the next election and whether you think they will keep their promises; then simply having reciprical wills that leave everything to the other does make a lot of sense.

jep49

Being in a similar situ, i might add that its the parents who need to get theirselves sorted first. Living in a rented house is costing them CGT relief on a main residence. Sugest they move into one of their rented houses and start the process of diminishing CGT and selling them off. Its easier to pass on various cash amounts than a whole house.And like me they might not relish being landlords in their old age. Maybe the tories will raise IHT thresholds, but there will be many problems before they pass away. Depending on the CGTsitu with those rented houses you cannot assume the full amount is there to be inherited.