Changing the will or making a gift

srcandas

My brain still hurts so any help will be greatly appreciated:

My brother and I are sharing my mother's estate 50/50 according to the will. We are under the inheritance tax threshhold.

The estate consists of a house £400000 and money £120000.

My brother cared for my mother in later years so I want him to have a larger share. Possibly:

He keeps the house (he currently lives there)
He gives me £110000
I keep all my mothers cash.

I get £230000 - he gets £290000 - Tx ma and pa

1. Could this be interpreted by the tax man as a gift from me to my brother of £30000?
2. Could such a gift attract tax?
3. Would it be better to get a Deed of Variation to cover it?
4. And if so does the deed need to be in place prior to applying for probate?

Tx in anticipation :beer:

brians_daughter

Hi there, not toos ure but i maybe able to assist re teh house etc. My mum cared for gran and gave up her job and home to go live with her. On her death my aunt set up something via the solicitor that meant my mum could continue to live in the home and on my mums death the 'extra' mum got went to aunts kids..if that makes sense?

It meant they both got the best of both worlds - mum has a home til she dies and on her death my aunts kids dont miss out on their mums share

just to add how refreshing to see someone who's head hasnt been turned by money and actually wants what is 'fair' for all regardless of wills etc x

Mojisola

brians_daughter wrote: »

Hi there, not toos ure but i maybe able to assist re teh house etc. My mum cared for gran and gave up her job and home to go live with her. On her death my aunt set up something via the solicitor that meant my mum could continue to live in the home and on my mums death the 'extra' mum got went to aunts kids..if that makes sense?

This does seem like the ideal solution. The proceeds of the house - or your share of them - could then come to you or any one else that you nominate.

Just make sure the trust is flexible so that if the relative living in the house wants to downsize or move to another area, they could do so.

srcandas

Mojisola wrote: »

This does seem like the ideal solution. The proceeds of the house - or your share of them - could then come to you or any one else that you nominate.

Tx peeps :beer:

Hmm but that leaves my brother with a long term debt. I want him to have the dosh.

Surely a deed of variation will cost no more (possibly less) to set up than a trust and that leaves no ongoing issues as I understand it?

I assume by suggesting this you believe we may hit a gift tax issue?

melancholly

depending on his financial situation, is it 'fair' to give all the freed up money to you and all the tied up money to him, with him also finding the cash to pay you a lump sum? it may be that he's happy with that, but just wanted to put across that it's not always about the pure numbers, it's about the form that the finance takes.

srcandas

melancholly wrote: »

depending on his financial situation, is it 'fair' to give all the freed up money to you and all the tied up money to him, with him also finding the cash to pay you a lump sum? it may be that he's happy with that, but just wanted to put across that it's not always about the pure numbers, it's about the form that the finance takes.

:D yes I'm imprisoning him to live as a penniless hermit for all his days

Bit concerned my post should make you think I am a heartless ...........

melancholly

srcandas wrote: »

:D yes I'm imprisoning him to live as a penniless hermit for all his days

Bit concerned my post should make you think I am a heartless ...........

no that's not what i meant - just wanted to put across an opinion that it isn't all about the total numbers. there was a really interesting episode of the Gerry Robinson 'Yon can't take it with you' tv show, where the issue of unequal inheritances came up and one of the issues was giving cash to one child and greater amounts in equity to the others. it made me think about it and i'd never done that before.

my post certainly wasn't an attack - just wanted to put across a different opinion..... that's all. if one person gets an inheritance that requires them coming up with a lot of cash to buy someone out, while the other gets all the cash, one can invest/spend how they like and one is tied in with no money to spend in the short to medium term. it isn't always about the raw numbers in terms of fairness (for example, if your brother has been a carer, by now he may be due a fantastic holiday, but an inheritance in terms of a house doesn't give him that option, whereas an inheritance in terms of cash would).

like i said, it's about what your family is happy with, but don't take all different opinions as attacks when that's not how they are intended! just trying to say that the form of the money can be as important as the amount.

Mojisola

[QUOTE=srcandas;44275182Hmm but that leaves my brother with a long term debt. I want him to have the dosh.

Surely a deed of variation will cost no more (possibly less) to set up than a trust and that leaves no ongoing issues as I understand it?

I assume by suggesting this you believe we may hit a gift tax issue?[/QUOTE]

I can't see that it leaves him with a debt. He will have the security of somewhere to live - either that house or another property - and you or your nominee will have no claim on it until after his death.

If you prefer, you can do a deed of variation and split the estate in whatever you both agree to. melancholly's is a valid one. I have a neighbour who cared for his mother until she died. In order to stay in the same house - surrounded by good neighbours and friends - he had to give his mother's cash assets to his brother. He now has his home but few cash reserves.

srcandas

Melancholly didn't see it as an attack just an unfortunate opposite of the true situation but you were not to know. There is as you say a lot more to these things than money. However in this case, and many others, it is the opposite of the scenario you highlight.

My brother is desperate to stay in the house. Sadly this means he will continue to live as he forced my mother to live in recent years on the bread line. He is 60 and perfectly able but insists he cannot and will not work again. He has no friends, no social skills. He in recent years not only isolated himself but also my mother sacking her cleaner and gardener. He had threatened to cancel her carer (half hour a day, should have been an hour, with her for 8 years) because the council wanted to be paid. My mother only at the end needed extensive care but he refused extra help. He refused to take a mobile phone when he left the house and refused my mother an alarm system. He refused to let her or anyone buy the things she needed.

During previous years he just watched TV. Despite the internet being connected he cannot use it. He refused despite my father's pleas to learn anything or usefully use his time. The house sadly cannot be described as anything but a dump.

Any help or advice was received with aggression and the likely suffering my mother would endure. But like all mums she stayed hopeful till the end.

Since my mother's death we, my wife and I, have invited him to go to Spain at our expense, invited him to stay over with us, invited him for walks in the New Forest (as he lives nearby and this would cost little - he hates to spend money), to restaurants at our expense. He has refused every offer.

However my mother and father asked me to do the best for him when they would be no longer here. So I am. My decision of whether to get him out of the house with the thought that having to move and at least communicate with someone might rekindle a small flicker of life or leave him happy in his lonely squaller is very very difficult.

I have just learned today the of my mother's three remaining friendly neighbours one has fallen out with him so now there are two; one a loyal hero and the other a couple with serious problems aged over 90. The latter took him out to sunday lunch at their expense with their daughter. He informed them that the food was not to his liking and that he wouldn't want to do it again.

Sorry Melancholly to burden you with this but I feel better for letting it out to someone. Thanks :beer:

Any

srcandas wrote: »

My brain still hurts so any help will be greatly appreciated:

My brother and I are sharing my mother's estate 50/50 according to the will. We are under the inheritance tax threshhold.

The estate consists of a house £400000 and money £120000.

My brother cared for my mother in later years so I want him to have a larger share. Possibly:

He keeps the house (he currently lives there)
He gives me £110000
I keep all my mothers cash.

I get £230000 - he gets £290000 - Tx ma and pa

1. Could this be interpreted by the tax man as a gift from me to my brother of £30000?
2. Could such a gift attract tax?
3. Would it be better to get a Deed of Variation to cover it?
4. And if so does the deed need to be in place prior to applying for probate?

Tx in anticipation :beer:

OP, I think this post really would get much better and specilised advice on the cutting tax board.

How come you are under the inheritance tax threshold? Just checking, as £520k is not under nil rate band threshold... unless your mother had part of your fathers nil rate band to use?

Giving away property has 2 implications...
A/ IHT if you die within 7 years

B/ Capital gains tax, if there has arisen any gains.
Relief is available for your private residence, but not second home. Theoreticaly, as you are giving it away immediately there should be no gain arising (as your deemed proceeds are Market Value of the house at the time of the gift and your cost is the MV at the time of mother's death which are very close dates). Even if there is a gain, every person has some annual allowance (£10100 last year, not sure what it is this year) so as long as the gain is lower then this and you have no other capital gains this year there is no tax payable.

Otherwise, deed of variation is definitely better in case you die within 7 years as there will be no IHT on the gift - deed of variation will basically mean that it will look like you never got anything..

This is advice to the best of my knowledge.

srcandas

Mojisola wrote: »

I can't see that it leaves him with a debt. He will have the security of somewhere to live - either that house or another property - and you or your nominee will have no claim on it until after his death.

If you prefer, you can do a deed of variation and split the estate in whatever you both agree to. melancholly's is a valid one. I have a neighbour who cared for his mother until she died. In order to stay in the same house - surrounded by good neighbours and friends - he had to give his mother's cash assets to his brother. He now has his home but few cash reserves.

Mojisola tx for the reply. While yourself and Melancholly state valid concerns I think one needs when referring to a theoretical situation to give a balanced view. These situations are always traumatic and very difficult to know what to do for the best.

On the trust my brother would still be tied to a debt, even if this would only be resolved after his death. Unless I'm missing something, and that could well be the case, I cannot see any benefits to my brother of such an arrangement. Please correct mer if I have misunderstood.

:beer: