Interetance tax for children? (owner is a widow with kids)

gemmaking

Question about a widowed dad.

House is bought outright (no mortgage, as it finished years ago.

The property owner is a widow who has 3 sons, all 18+, living there.

The property deeds have the male widows name on the deeds only
(his wife was removed from the deeds when she passed away)

Questions
If in the future when the dad passes away, will 3 of the children have to pay inheritance tax?

and if 1-3 of the children are added on the deeds/ register of the property, then does that mean they can avoid paying inheritance tax? as they will be owners?

Is that one way for them to avoid paying inheritance tax? by the father adding their name on the deeds ?



added details here
house is worth £380,000

Sons ages, 26, 34, 36

2 are not likley to move out, 1 lives somewhere else locally


and I was reading from this site.

Check it here:

http://www.hmrc.gov.uk/rates/iht-thresholds.htm

Does that mean that the 3 children would have to pay 40% of £380,000 ? (according to that site)

On_My_Lonesome

The estate pays inheritance tax not the beneficiaries only once the tax has been paid can the estate be distributed to the beneficiries (the children), of course you only pay tax on the amount in excess of the NRB currently £325,000 and possibly up to £650,000 if the deceased wife didn't use her NRB.

As for adding the children on if he does that he would not only have to survive 7 years from the date of the transfer for it to be outside his estate but also pay market value rent to the owners (the children) if he lived more than 7 years and paid market value rent then it may be outside his estate for IHT purposes.

CLAPTON

not enough details

how much is the father's estate worth

how old are the sons?

are they likely to move out (girlfriends, own property etc)?

if the children own part of the property but stop living in the house, then, when it is sold they will be liable to capital gains tax.

gemmaking

CLAPTON wrote: »

not enough details

how much is the father's estate worth

how old are the sons?

are they likely to move out (girlfriends, own property etc)?

if the children own part of the property but stop living in the house, then, when it is sold they will be liable to capital gains tax.

added in post too.
house is worth £380,000

Sons ages, 26, 34, 36

2 are not likely to move out, 1 lives somewhere else locally

On_My_Lonesome

What other assets are there in the estate? Had the wife made any gifts on or before her death to anyone other than her husband?

If not his executors will be able to claim her NRB and there will be no IHT payable anyway unless including other assets it goes over £650,000

gemmaking

On_My_Lonesome wrote: »

What other assets are there in the estate? Had the wife made any gifts on or before her death to anyone other than her husband?

If not his executors will be able to claim her NRB and there will be no IHT payable anyway unless including other assets it goes over £650,000

The wife had no assets, and no other assets in the estate.

NRB ?

CLAPTON

if the total estate would be 380,000 and from the facts given, the IHT allowance would be 650,000

so there is no IHT liability anyway

so no need to do anything about giving anything away.

gemmaking

CLAPTON wrote: »

if the total estate would be 380,000 and from the facts given, the IHT allowance would be 650,000

so there is no IHT liability anyway

why not?

even if his name, the father stays on the deeds alone, 'without' adding the sons on the deeds?

or they would have to be added, to avoid paying inheritance tax?

and would all 3 of them have to be added ?

CLAPTON

gemmaking wrote: »

why not?

even if his name, the father stays on the deeds alone, 'without' adding the sons on the deeds?

or they would have to be added, to avoid paying inheritance tax?

and would all 3 of them have to be added ?

inheritance tax is paid on estates OVER £650,000 (including the deceased wife allowance)

the estate is only worth 380,000
so NO IHT is payable

if he gives some to his sons then they will potentially incur capital gains tax liability.

troubleinparadise

What he needs is a clear, legally drawn up Will, to say what he wants done with his estate when he dies.

People get caught up with trying to play clever games with IHT when unless you have a very large estate (in this case over £650,000) it can actually make life more difficult for all concerned, and just line the pockets of solicitors.

The father should concentrate on putting his affairs in order so that dealing with paperwork is simple and straightforward, and enjoying the rest of his days without such worries.

gemmaking

troubleinparadise wrote: »

What he needs is a clear, legally drawn up Will, to say what he wants done with his estate when he dies.

People get caught up with trying to play clever games with IHT when unless you have a very large estate (in this case over £650,000) it can actually make life more difficult for all concerned, and just line the pockets of solicitors.

The father should concentrate on putting his affairs in order so that dealing with paperwork is simple and straightforward, and enjoying the rest of his days without such worries.

I thought the threshold to pay Inheritance tax is :
40% (which would be paid by the sons) of the value of a propery..

£325,000 (6 April 2009 - 5 April 2015)
The children to pay 40% of £325,000+ (according to the below link) of the inherited property


Which will increase in 7-10 years.

Check it here:
http://www.hmrc.gov.uk/rates/iht-thresholds.htm