CGT on inherited property

jimmo

John_Pierpoint wrote: »

Any thoughts on waiting until after the death and making an Instrument of Variation

Essentially, as you know, an Instrument of Variation alters a person’s will but the only people who can make an Instrument of Variation are beneficiaries who are giving up all or part of their entitlement under the original will.

To me, there is a parallel here.

Regardless of whether father passes a one third share of the house by gift or will, it will be the OP who instigates the passage of a one sixth share of the house to his wife.

If HMRC can attack a gift followed by a sale as a series of artificial transactions instigated by the OP they can also attack an Instrument of Variation followed by a sale as a series of artificial transactions instigated by the OP.

Personally speaking, I find it equally abhorrent that HMRC would attack either of them but the danger is there.

At the same time, if father gifts or leaves one sixth shares in the house to the spouses of his children that will be something he has done and will not mitigate his personal, or his estate’s liability to tax. So much simpler.

However, having become involved in this, I have to say that it worries me that the OP is convinced that if his father can gift the house before he dies that will save serious amounts of money in probate fees.

The Government probate fee is £105, give or take a couple of £s for copies.

http://www.direct.gov.uk/en/Governmentcitizensandrights/Death/Preparation/DG_10029716

I therefore assume he is concerned with solicitor’s fees for handling probate and I can’t help the feeling that somebody is being economical with the truth. Will a “professional” provide an all-in service for a £40k estate for a fixed percentage of £40k?

Will that professional require extra fees for handling a deemed estate of £690k for IHT purposes?

To me, that is the real question the OP should be focussing on as the priority.

John_Pierpoint

The missing posting in this discussion is one from "father".
We don't know his personal circumstances, his mental and emotional capacity. Most families feel a need to !!!!!foot round the intergenerational taboos of sex, money and death.
I don't know the statistics but from personal experience, the intergenerational transfer is usually from an elderly widow, probably not in a fit state to handle such a discussion rationally.
I have a great grandfather, who accidentally became a successful entrepreneur. He died aged 50 and his will is still a reference point for later documentation. Its terms reached forward to influence the outcome of my own father's estate. GG-Father's will is dated a week before he died, presumably he knew he was dying and had some hard choices to make.

[I love the net nanny - Mrs Slocombe will explain]

getmore4less

jimmo wrote: »

Essentially, as you know, an Instrument of Variation alters a person’s will but the only people who can make an Instrument of Variation are beneficiaries who are giving up all or part of their entitlement under the original will.

To me, there is a parallel here.

Regardless of whether father passes a one third share of the house by gift or will, it will be the OP who instigates the passage of a one sixth share of the house to his wife.

If HMRC can attack a gift followed by a sale as a series of artificial transactions instigated by the OP they can also attack an Instrument of Variation followed by a sale as a series of artificial transactions instigated by the OP.

Personally speaking, I find it equally abhorrent that HMRC would attack either of them but the danger is there.

At the same time, if father gifts or leaves one sixth shares in the house to the spouses of his children that will be something he has done and will not mitigate his personal, or his estate’s liability to tax. So much simpler.

However, having become involved in this, I have to say that it worries me that the OP is convinced that if his father can gift the house before he dies that will save serious amounts of money in probate fees.

The Government probate fee is £105, give or take a couple of £s for copies.

http://www.direct.gov.uk/en/Governmentcitizensandrights/Death/Preparation/DG_10029716

I therefore assume he is concerned with solicitor’s fees for handling probate and I can’t help the feeling that somebody is being economical with the truth. Will a “professional” provide an all-in service for a £40k estate for a fixed percentage of £40k?

Will that professional require extra fees for handling a deemed estate of £690k for IHT purposes?

To me, that is the real question the OP should be focussing on as the priority.

It is not just estate value that impacts the amount of work and the costs, it is how it is spread out, consolidating accounts where there are no CGT implications an be a worthwhile execise to reduce the number of enquiries and pidly bits of income and tax to deal with.

also making sure that the tax afairs for the previous years are all up to date this can save a lot of work if they are not simple(older records are often harder to go through).

Most of the costs related to the house should be about the same any way the important thing is to look at the charging structure if using professional help, fixed rates can work but often T&M can be a better way especialy if you often end up doing a lot of the work anyway.

shraga

jimmo wrote: »

However, having become involved in this, I have to say that it worries me that the OP is convinced that if his father can gift the house before he dies that will save serious amounts of money in probate fees.
....

I therefore assume he is concerned with solicitor’s fees for handling probate and I can’t help the feeling that somebody is being economical with the truth. Will a “professional” provide an all-in service for a £40k estate for a fixed percentage of £40k?

Will that professional require extra fees for handling a deemed estate of £690k for IHT purposes?

To me, that is the real question the OP should be focussing on as the priority.

Thank you. Yes it is the solicitor's fees that I am concerned about. I have been advised that these are typically a percentage of the estate's value therefore excluding the house from the estate will reduce the estate's value. Far more importantly it will allow us to dispose of it quickly - which is very much my father's wish. Although he knows he won't be with us he wants us to make use of the funds sooner rather than later - particularly my youngest sister who is trying to move up from her flat to a house and struggling with the jump in prices.

Regarding "economical with the truth" - I am sorry but I don't understand. Are you suggesting I am lying about something?

getmore4less

Is the house actualy suitable place for him to be living.

Is an option to sell now and rehouse either rented or maybe in with one of the family(if time is short).

grey_gym_sock

i imagine jimmo was suggesting that a solicitor was being economical with the truth in suggesting that a percentage fee is the only way to pay solicitors to handle probate. if a solicitor is named in the will as an executor, then i think they can choose on what basis they will charge; if not (for instance, if the children are named as executors), then you are free to negotiate if you then use a solicitor.

i'm not clear if your father wants to remain in his house. if he does, then the house isn't really on the market in a serious way. if it is only to be sold after he's died, then i should think it's true that it could be done more quickly if it's already owned by his children and their spouses.