Tax question

Banger696

My dad has recently passed away and me and my mum are executors and in his will he leaves half our property to me and the other half to my mum. He also has left savings of 115k to her which she wants to give to me as a gift on trust so I can look after her and the house. Are there any tax implications in this? She also has a will which is a mirror image of my dads leaving remaining sums to me. Any ideas?

Savvy_Sue

Sorry for your loss. What is the value of the house? Anything of value apart from the house and savings? That may affect the answers we give.

Banger696

House has been valued at 400k and I am to assent to half ownership according to the will. Also how do care costs come into this if my mum (84) needs care?

Savvy_Sue

And you're in England? And does Mum now live alone, or are you living with her?

Sorry to keep asking questions, I'm not sure I know the right answers but I know more information is needed ...

Banger696

Live in England and live with mum looking after her she is 84. We are now looking at a gift of 80k to me as the government compensation scheme only covers 85k per person.

Savvy_Sue

Banger696 wrote: »

Live in England and live with mum looking after her she is 84. We are now looking at a gift of 80k to me as the government compensation scheme only covers 85k per person.

Surely that's £85k per financial institution? So you could have £85k in NatWest, and £85k in Santander, and they'd each be covered. You do have to be a bit careful about 'linked' banks, eg NatWest has links to either RBS or BofS and Halifax has links to whichever NatWest isn't linked to if that makes sense.

Final question for now, how old are you? If you don't mind me asking .... it does make a difference.

Actually, one final, what is the wording of the will in relation to the house - you say you have to assent to the half ownership, and that might be important also. Leave any identifying details out, obviously ...

CLAPTON

Banger696 wrote: »

Live in England and live with mum looking after her she is 84. We are now looking at a gift of 80k to me as the government compensation scheme only covers 85k per person.

No it doesn't

the government guarantee is 85,000 per financial institution

so you could have 85k in Lloyds
85k in Barclays
85k in HSBC
85k in Nationwide
85K in norwich and peterboorough

so thats 450,000 not to mention RBS, Coventry, Yorshire BS, Virgin etc etc

we need the full facts to advise

Banger696

Ok will try and give a general synopsis, I have grant of probate that the solicitor extracted and am going to see the bank rep in a weeks time. The will was written by a solicitor to minimise Inheritence Tax, the will is two pages long but I will try and pick out the relevant bits that you are asking for.

Me and my mum are executors but she has reserved her executorship so that leaves me to deal with the bank etc. The solicitor is arranging assent with the land registry and deeds for which there is another fee.

As far as I can tell this is the relevant bit to the property.....

"I give free of tax all my share as beneficial tenant in common in situate and known as 'Our address' aforesaid and all other (if any) interest therein or in such other property which is my principal residence at the date of my death free of all sums and interest secured by way of mortgage or otherwise at the date of my death which shall be paid out of my residuary estate to my said son 'My Name' absolutely."

It then goes on with other clauses such as what happens if my mum should survive for one month and if I pre-decease either of them then my cousins are to get the estate.

I am 46

Just to mention I am also receiving Incapacity Benefit and DLA and currently being reassessed for ESA which Incapacity benefit is contribution based.

Yorkie1

Banger696 wrote: »

My dad has recently passed away and me and my mum are executors and in his will he leaves half our property to me and the other half to my mum.

Banger696 wrote: »

"I give free of tax all my share as beneficial tenant in common in situate and known as 'Our address' aforesaid and all other (if any) interest therein or in such other property which is my principal residence at the date of my death free of all sums and interest secured by way of mortgage or otherwise at the date of my death which shall be paid out of my residuary estate to my said son 'My Name' absolutely."

My condolences to you and to your mum.

I'd just like to pick up on the two highlighted bits of text.

Tenants in common each own a part of the house and distribute it as they wish in their will. So your dad will have had a part, and your mum the other part. Probably split 50/50 but not necessarily. Let's assume it is 50/50, though.

Your two posts are mutually inconsistent, and it's important for you to understand how in order to move forward correctly or to have informed conversations with your solicitor.

Your Dad owned 50% of the property. His will, as cited by you above, gives all of that 50% to you.

In your initial post, you say that your Dad gave half the property to you and half to your Mum. This is not borne out by the will. In fact, your Mum already owns her half (or whatever the proportion is). The point of being tenants in common is that each TIC owns their part separately.

The other interpretation of your initial post, is that your Dad split his existing 50% into two, and therefore gave 25% of the property each to you and your Mum. This is highly unlikely given what you've written about the will.

I'm not sure about the assent part of the will - you haven't cited that element of it, but I thought I'd just clarify what you originally paraphrased as it isn't correct.

xylophone

Was the property originally owned as 50% each parent as tenants in common?
If so, the will seems to bequeath 50% of the property to you? Your mother owns the other half already?

Who needs to assent and to what?

Did your father leave all his cash savings (£115,000?) to your mother?

As you will own half the house, in the event that your mother goes into care, the LA might not be able to take the value of the house into consideration when assessing her for fees (although it is not inconceivable that they might place a charge on the half of the house she owns such that were the house sold (or in the event of her death) they could make a claim?

However were she to need care, the £115,000 would certainly be up for consideration - a gift to you might be considered deprivation of capital?

And what effect would a large amount of capital have on your benefits?

Banger696

The first post is wrong, my mum already owns half the property and I have to assent to my dad's half for which my solicitor is arranging.

As for the benefits currently they are contribution based and the DWP adviser told me they wouldnt affect my IB or ESA and I quote "we dont need to know about that as it is contribution based".

The cash and shares have been left to my mum but she doesnt want them to be taken if she goes into care. So she is gifting a portion to me for me to look after her and the house. The solicitor mentioned 2-3 years for the LA not to take the gift into account for care but officially it is 7 years. Solicitor also felt the house as it was in joint names couldnt be sold as I am living in it. I am assuming I have remembered this correctly and it is right.