IHT best way forward after intestate death

Devon_Sailor

Good day all,

I wonder if i could get some thoughts please. I am now listed as an executor on my Grandmothers will (still with us and feisty as ever, luckily enough!). She is looking to sell her house, and downsize somewhere into the local town (she lives ont he edge of the moor).

The background -

Grandfather died unexpectedly in 2007, intestate. Now, as far as i have been told, my Grandmother got a half share of the house, and my mother and her 3 bros/sis' all got an interest in the property.

Fast forward to today, and the house is up for sale, c.£600,000.

My mother and her siblings are all very much of an attitude (quite nderstandable) that all proceeds should go to my gran; that it will help her by a smaller house and keep her self sufficient for as long as possible.

Now, my thought is that it would be much better from a financial point of view, for the house sale to go ahead and for all parties to get the divident expeted (ie, gran 50%, each offspring their 12ish%) as it would reduce any IHT burden. They could then slap the money into a high interest savings account or bond, and then take the dividend, whilst keeping the capital secure for use for my Gran if she ever needed care home fees etc.

Surely that way my mum and her siblings get a partial and usable form of inheritance fromt heir dad (which i know they could do with as things are tight all round...) whilst protecting the original money to provide for their mum if or when she really needs it.

Have I missed something or am I completely off course? I know emotions can run very high over things like inheritance, but im desperate for them to be able to do what they want with it withot loosing a massive chunk to the tax man which could actually help them achieve their long term goals of keeping GRan well looked after for the rest of her life.

Any thoughts wold be much appreciated,

D_S

Mojisola

In 2007 these were the intestacy rules -

https://www.accident999.name/intestacy.html
"If your estate is worth more than £125,000 then your spouse would get £125,000 and a life interest (ie the right to take interest on the remainder, but not the capital itself) in half of anything over this sum. Your children would get half the sum over £125,000 immediately and be entitled to the other half on the death of your spouse. Should any of your children die before you then their children would be entitled to take their parent's share."

Before you start making any decisions, you need to find out exactly what was agreed after your grandfather died.

CLAPTON

the rules of intestancy before 2009 were

grandmothers get first 125,000 and a life interest in half the rest; the children get the other half

so if grand father's estate was worth 600,000 then gran gets 125,000 and a life interest in 237,500 and the children get the remaining 237,500

assuming of course that the house wasn't owned as joint tenants and the sole asset was the house in his sole name

getmore4less

Find out who applied for Letters of administration and ask to see the paperwork that was done at that time.

One thing you will be trying to establish is the unused nill rate band for that estate since that will transfer to gran

The house should now be in trust since it can't have 5 owners who are the trustees.


Also look at PA1 and IHT400 to start learning about what you need to do as your job as executor.

John_Pierpoint

First step is to find out who currently owns the house,
[Land Registry on-line £4 ++ depending on how clear the information from the first £4 is].

It might well be that nobody has bothered with the legal niceties and the house still belongs 100% to grandfather, as far as the Land Registry is concerned - or perhaps it is not even registered - who owned it before grandfather/grandmother?.

If Grandfather did own it 100% you might discover that grandfather's investments mopped up the widow's £125,000 inheritance and grandmother owns none of it.
In which case her children own half between them with the right to the other half when grandmother dies. Grandmother has the right to the income (£0.00) from the other half and lives there rent free as the beneficiary of "an interest in possession trust".

If the house is sold, the trust could claim relief from Capital Gains Tax as it is grandmother's principle private residence BUT her children might have a problem with their half. There used to be a CGT relief for children who "provided" a rent free home for their widowed mother - but not any more.

If your grandmother does not own the house, a local authority is not going to be able to take that house to pay for care fees.

As grandfather died more than 2 years ago, it is too late to create a "deed of family arrangement" to, in effect, write the will that grandfather failed to make.
Obviously there is nothing (yet) in inheritance or tax law to prevent the 4 children making their own informal arrangements to mutually support grandmother, but if they cannot stick together and feel they need to make legal arrangements, expect a 4 figure legal bill and possibly ongoing tax and accountancy issues.

When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind;

Lord Kelvin

Devon_Sailor

Thanks all. I will try and get y mother to dig out any paperwork that she has. I return from the "hot and sandy" place just before Christmas so I can have a goo ferrit through it all over leave.

I will certainly follow up all the links and hints suggested to pre-arm myself.

Much appreciated.

Regards,

D_S