Inheritance Tax: Save £100,000s with simple advanced planning Article Discussion

kizzaplough

Hi all


my father has recently had a heath scare so is letting us his children in to his will intensions. this is what he has in what he would like to happen and but is happy to change things if he can see it will benefit us another way.


He has an estate worth approx. 1.5million this comprises off nine property's eight of which he rents out. the ninth is his which my grand mother left him which is worth about £450,000. he is putting it in a trust to leave to us, his five children. with this he has put in one wishes that nothing can be sold for thirty 30years as he would like the property's to stay in the family. with inheritance tax being 40%
how can we find that sort of money. would we be able to re mortgage some property's for thirty years through the trust to pay the inheritance tax and. this way we could pay off the mortgage each month from the rent and what is left after all the running cost split five ways each year. is this a good way to do things if not I would love some advice.

Mojisola

kizzaplough wrote: »

He has an estate worth approx. 1.5million this comprises off nine property's eight of which he rents out. the ninth is his which my grand mother left him which is worth about £450,000. he is putting it in a trust to leave to us, his five children. with this he has put in one wishes that nothing can be sold for thirty 30years as he would like the property's to stay in the family. with inheritance tax being 40%

I'd never put a millstone like that round my children's necks.

Who is going to find the money for 30 years to maintain and insure the property and pay the council tax? What happens if some of the children have to live on benefits for years - will they still have to pay up to look after an asset when they are desperate for money themselves?

xylophone

Your father should take expert advice - who is to bear the burden of being Trustee and the associated administration?

https://www.gov.uk/trusts-taxes/overview

http://www.step.org/member-directory

troubleinparadise

Slightly off topic of how the family would be able to afford to pay inheritance tax whilst not selling property to realise the IHT funding; here is a link to a cautionary tale about the somewhat idealistic notion of leaving a house to be used by a family as a holiday home:

http://www.dailymail.co.uk/news/article-3413737/BONG-Feaud-Ten-ITV-newsreader-Tom-Bradby-accuses-relative-blackmail-disputed-family-holiday-home-rare-clock.html

I somehow doubt that any decent solicitor would advise someone to do such a thing in a will or trust - as Mojisola says, it is a millstone rather than the wonderful gift the testator might fondly imagine it is!

Keep_pedalling

The clause is plain bonkers, and as it is the estate that pays IHT, some properties would need to be sold to meet the bill, the benificiaries are under no obligation to pay anything.

Keep_pedalling

It is also likely that the benificiaries would be able to terminate the trust and get the entire estate sold to receive their inheitance as per Saunders v Vautier.

kizzaplough

My fathers thoughts are that his estate is worth 1.5million now but in 30years could be worth 3million so we pay a 450000k mortgage approx 1700k a month rent comes in approx 6000 a month after upkeep and insurances we have say 2500 a month profit so 30000 a year split 5 ways. What does every one think is the best way forward. Is it to sell all property's after death and IHT then split money's so we can invest the money as individuals now or go with my fathers wishes. pS myself, 2 brothers, have our own houses with mortgages, my two sister one is only 23 with no property, the other is on benefits.

Mojisola

kizzaplough wrote: »

Is it to sell all property's after death and IHT then split money's so we can invest the money as individuals

Definitely.

If any of you choose to go into business together as landlords, you can use your inheritance to buy something or, if some of your father's property is suitable, have the building as your inheritance while the others get cash through the other properties being sold.

Keep_pedalling

kizzaplough wrote: »

My fathers thoughts are that his estate is worth 1.5million now but in 30years could be worth 3million so we pay a 450000k mortgage approx 1700k a month rent comes in approx 6000 a month after upkeep and insurances we have say 2500 a month profit so 30000 a year split 5 ways. What does every one think is the best way forward. Is it to sell all property's after death and IHT then split money's so we can invest the money as individuals now or go with my fathers wishes. pS myself, 2 brothers, have our own houses with mortgages, my two sister one is only 23 with no property, the other is on benefits.

It's a bad thing to try and continue to control stuff from the grave, and once you have passed your money on you really need to let the beneficiaries deal with it in the way that suits them best, This is a bonkers clause to leave in a will, and I would have no hesitation in going against his wishes.

kizzaplough

Thanks for your thought and opinions, looking at my father view point what do you think would be the best way to leave his estate to us.