Leaving 50% of property in a will - how does it work?

igloo

Any help would be greatly appreciated.

My parents own their house outright. It was in my fathers sole name and he wanted to transfer it to joint names but then realised that when one of them died, the other half would go to the survivor. That is what he wanted but was concerned about inheritance tax so, instead of joint names, he has set it up as "tenants in common" where they each own 50% of the property.

ok.... they are doing mirror wills whereby whoever goes first, 50% of the property is being left to me but he is worried about how it will work after one of them goes. I've told him not to worry about it lol but he just wants to know how. I think its probably a transfer form with the Land Registry and thats it.

I know some would say that its risky tranferring property to children but i can assure any doubters out there that I am totally trustworthy and wouldnt sell it from under their feet. also, there is no risk of me becoming insolvent.

thank you for any help

cte1111

I think your parents should take proper inheritance tax advice. How much is their house worth? Do they have other assets?

Any assets left to a spouse are free of IHT. The surviving spouse can then use the deceased partner's IHT allowance against their estate. So leaving half of the house to you just means that the first partner's IHT allowance is used sooner rather than later, with no net tax saving.

I'm sure you are trustworthy, but what if your surviving parent wanted to remarry or sell the property? It could also form part of a divorce settlement / bankruptcy if either of these events happened to you. If your parents want to work on IHT planning, then that's very sensible but doing so without proper advice can lead to problems.

igloo

the house is probably around 200k but they do have money and investments which I dont know how much.

they are both very old and have been married for the best part of 50 years so I doubt would remarry at any point . I have no debt other than a small mortgage which I could repay if I wanted so have no intention of becoming bankrupt and have no intention of becoming divorced either.

does anyone know how it would work?

xylophone

Surely your parents' solicitor has advised them? After probate, the half share can be registered in your name at the Land Registry.You can check which form would be required- I think it might be TP1 for a partial transfer?
http://www.hmrc.gov.uk/inheritancetax/intro/transfer-threshold.htm re IHT and spouses.

G_M

The Executer of the the deceased's Will will have to deal with the estate first. Pay any debts, pay any inheritance tax etc. Assuming the Estate has sufficient liquid assets to do this (savings/investments) then once the Estate is wound up the property can be re-registered in the joint names of yourself and the surviving spouse.

This is a straight-forward process (asuming no mortgage on the property.....)

However, if the savings etc are not enough to pay the debts/tax etc, then the Executer may have to use the property to pay them off. By selling the property. Though how this can be done with the surviving spouse owning 50& I'm not sure.

My guess is it would be far better to leave the property owned by both as joint tenants. When on dies, the other automatically inherits the whole property (tax free). There are no issues about transfer, no tax, no risk of a need o sell. The surviving spouse can live there securely.

In due course, when the 2nd spouse dies, the property can be passed to you in full via their will.

However, please note I am not an expert in this field and strongly recommend they take expert advice re inheritance tax planning, their will, and the property management.

igloo

xylophone wrote: »

Surely your parents' solicitor has advised them? After probate, the half share can be registered in your name at the Land Registry.You can check which form would be required- I think it might be TP1 for a partial transfer?
http://www.hmrc.gov.uk/inheritancetax/intro/transfer-threshold.htm re IHT and spouses.

yes , the solicitor has advised them and done their wills. my father just likes to know the mechanics behind things

G_M

igloo wrote: »

...my father just likes to know the mechanics behind things

http://lrs-web01.squiz.co.uk/_media/downloads/forms/TP1.pdf