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Wills & Flat Help
Seraphim
Posts: 246 Forumite
My Mum has just died and we are trying to sort out my Dad's Will.
My parents had mirror Wills stating that everything would do to the surviving spouse, and then everything would come to me.
I have a step-brother (on my Dad's side) who has already been told he is getting nothing. There is apparently a paragraph in there which explains why I will be getting the assets and my brother has been excluded.
My father's estate is under the £660k threshold hence we aren't too bothered about IHT. He went to his solicitors last week who told him that my brother would be able to challenge the Will despite my father wanting everything to go to me, and that if he did challenge it, it would be VERY likely that he would get 50% of my father's estate. Is this really the case?!?
My Dad's solicitor then went on to say that if my Dad left something in the Will to my brother - for example a bequest of 15% of the cash in the estate - he would have a very poor case to argue if he challenged the Will. Anyone got any thoughts on this??
Lastly, my father owns his flat outright (worth approx 300k). It was my mother's wish that ALL assets be passed onto me when they both die - and my Dad promised my Mum he would carry out her wishes. He has suggested that I put my name on the flat - either as a co-owner, or as an outright owner. I spoke to my accountant about this and he said I would be liable for CGT plus my father would have to pay me rent. Can someone give me a better outline of why my father would have to pay me rent, and also what costs (i.e. stamp duty, CGT) I would have to pay?
I strongly want to transfer the flat into my name because I know my brother is highly likely to kick up a fuss when my father dies. I am not that fussed about the cash (and the only reason I want it to come to me is because it is what my father promised my mother he would do) but I do want the flat because it's my childhood home and I know that if the Will was contested and my brother won half the assets, I wouldn't have enough money to buy him out.
Any advice or pointers would be greatly appreciated.
My parents had mirror Wills stating that everything would do to the surviving spouse, and then everything would come to me.
I have a step-brother (on my Dad's side) who has already been told he is getting nothing. There is apparently a paragraph in there which explains why I will be getting the assets and my brother has been excluded.
My father's estate is under the £660k threshold hence we aren't too bothered about IHT. He went to his solicitors last week who told him that my brother would be able to challenge the Will despite my father wanting everything to go to me, and that if he did challenge it, it would be VERY likely that he would get 50% of my father's estate. Is this really the case?!?
My Dad's solicitor then went on to say that if my Dad left something in the Will to my brother - for example a bequest of 15% of the cash in the estate - he would have a very poor case to argue if he challenged the Will. Anyone got any thoughts on this??
Lastly, my father owns his flat outright (worth approx 300k). It was my mother's wish that ALL assets be passed onto me when they both die - and my Dad promised my Mum he would carry out her wishes. He has suggested that I put my name on the flat - either as a co-owner, or as an outright owner. I spoke to my accountant about this and he said I would be liable for CGT plus my father would have to pay me rent. Can someone give me a better outline of why my father would have to pay me rent, and also what costs (i.e. stamp duty, CGT) I would have to pay?
I strongly want to transfer the flat into my name because I know my brother is highly likely to kick up a fuss when my father dies. I am not that fussed about the cash (and the only reason I want it to come to me is because it is what my father promised my mother he would do) but I do want the flat because it's my childhood home and I know that if the Will was contested and my brother won half the assets, I wouldn't have enough money to buy him out.
Any advice or pointers would be greatly appreciated.
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Comments
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My father's estate is under the £660k threshold hence we aren't too bothered about IHT. He went to his solicitors last week who told him that my brother would be able to challenge the Will despite my father wanting everything to go to me, and that if he did challenge it, it would be VERY likely that he would get 50% of my father's estate. Is this really the case?!?
My Dad's solicitor then went on to say that if my Dad left something in the Will to my brother - for example a bequest of 15% of the cash in the estate - he would have a very poor case to argue if he challenged the Will. Anyone got any thoughts on this??
Is your Dad in England or Wales? Scottish law is a bit different.
If so, I'm surprised that the solicitor has said this. Could he give your Dad examples of cases where this has happened?
Usually, if the children of the family are adults, they can only challenge the will if they were being financially provided for by the parent in the period prior to the death.
I think that there have been some cases where an adult child has not been mentioned in a will and the would-be beneficiary has argued that the parent "forgot" about them and won a settlement. As there is a paragraph in the will giving the reason for not leaving him something, this couldn't apply here.0 -
Depending on how far along things are, your father could do a variation on your mother's will so that some of your mother's estate comes directly to you instead of him.
There could be a possible problem in the future if your father needed means-tested benefits or residential care. Read up on "deprivation of assets".0 -
Get your father to put a clause in his will leaving £1 to your step-brother; that way he will have been left something by your father and not excluded. He then would have no grounds for challenge.0
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Lastly, my father owns his flat outright (worth approx 300k). It was my mother's wish that ALL assets be passed onto me when they both die - and my Dad promised my Mum he would carry out her wishes. He has suggested that I put my name on the flat - either as a co-owner, or as an outright owner. I spoke to my accountant about this and he said I would be liable for CGT plus my father would have to pay me rent. Can someone give me a better outline of why my father would have to pay me rent, and also what costs (i.e. stamp duty, CGT) I would have to pay?
If / when you sell the flat, then you will have to pay CGT on the increase in value between the date that you first owned the flat and the purchase price (less any capital expenses, e.g. building an extension).
If your Dad lives in the flat after you own it, then it will be treated as a gift with reservation for inheritance tax purposes. Usually if something is gifted and the donor lives for 7 years or more, then there will be no IHT on the item (taper relief applies if donor lives between 3-6 years after gift).
However if the donor carries on living in a property, then there is no exemption, so full IHT will need to be paid on the property's value. If market rent is paid on the property, then this does not apply, which is presumably what your accountant is referring to.
Does your Dad have other property? I wonder if he is happy about giving away his main asset. He could go on and have future relationships, maybe even marry again. If he does not own his own home then this could cause him difficulties in the future.
If you own the property, then if you got divorced then it would form part of the settlement. If you went bankrupt, then the flat would be sold to pay off your creditors. So there are other risks to consider.0 -
Is your Dad in England or Wales?
England.Depending on how far along things are, your father could do a variation on your mother's will so that some of your mother's estate comes directly to you instead of him.
Interesting, thank you.There could be a possible problem in the future if your father needed means-tested benefits or residential care. Read up on "deprivation of assets".
Yes, my accountant mentioned this. I would pay - not a problem.Get your father to put a clause in his will leaving £1 to your step-brother; that way he will have been left something by your father and not excluded. He then would have no grounds for challenge.
Thank you - I will suggest this.
So, assuming I put my name on the flat, is it better to do it as tenants-in-common, or for the entire flat to pass to me fully? Any ideas on stamp duty & CGT? Also, what about rental payments? Ideally I wouldn't charge my father anything but I understand that I might have to charge him rent (at market rate)?0 -
If / when you sell the flat, then you will have to pay CGT on the increase in value between the date that you first owned the flat and the purchase price (less any capital expenses, e.g. building an extension).
If your Dad lives in the flat after you own it, then it will be treated as a gift with reservation for inheritance tax purposes. Usually if something is gifted and the donor lives for 7 years or more, then there will be no IHT on the item (taper relief applies if donor lives between 3-6 years after gift).
However if the donor carries on living in a property, then there is no exemption, so full IHT will need to be paid on the property's value. If market rent is paid on the property, then this does not apply, which is presumably what your accountant is referring to.
Does your Dad have other property? I wonder if he is happy about giving away his main asset. He could go on and have future relationships, maybe even marry again. If he does not own his own home then this could cause him difficulties in the future.
If you own the property, then if you got divorced then it would form part of the settlement. If you went bankrupt, then the flat would be sold to pay off your creditors. So there are other risks to consider.
That makes perfect sense, thank you. No, my father does not have any other property. He was the one who suggested putting the flat into my name - I just need to know all the legal stuff surrounding it so we can make the best decision.0 -
I think any solicitor would actually try to talk your father out of signing away his home but, if he's certain this is something he wants to do, look at the idea of owning it as "joint tenants". That way, if you predecease him, the flat would automatically revert to his ownership. If he died first, it would be yours and wouldn't be part of his estate. I don't think he would have to pay you rent, either, but check up on that.0
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I have a step-brother (on my Dad's side) who has already been told he is getting nothing. There is apparently a paragraph in there which explains why I will be getting the assets and my brother has been excluded.
My father's estate is under the £660k threshold hence we aren't too bothered about IHT. He went to his solicitors last week who told him that my brother would be able to challenge the Will despite my father wanting everything to go to me, and that if he did challenge it, it would be VERY likely that he would get 50% of my father's estate. Is this really the case?!?
A lot of solicitors are very bad at wills. Some of the ones discussed on here are horrendous, and they were written by solicitors.
I suggest that your father finds someone who is STEP registered.
And that he asks his current solicitor for the case law to support his comment.
And make sure the solicitor is NOT listed as the executor.If you've have not made a mistake, you've made nothing0 -
Just need to add that his will should have a back-up position in case you do die before him. What would he want to happen to his estate then?0
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Following on from this, I have spoken to my father's solicitor who has suggested that we either do a deed of variation which passes half of the flat onto me now, or we setup half of the flat in trust for me. The trustees would be me, my father, and one of my parent's closest friends.
As far as I understand it, the Trust would probably be a good idea because it gives my father security as I cannot kick him out of the flat. It also protects the property against potential issues such as divorce or bankruptcy, plus if my father were to go into care, it would help protect the property against the LA. It also means that CGT won't be calculated until such time as the property is passed on to me - and assuming that property prices increase, this is a good thing in the long-term.
I also understand that even if my brother did decide to challenge my father's Will, this setup would mean the half-share in the property would not fall into the Will's remit therefore only half of the property would ever be "at risk".
The only downside I can see is the cost, which I'm happy to pay.
Does this all sound correct and reasonable or have I missed any major points?
Thanks in advance!0
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