Inheriting half the house from Dad

Siskin

Please move this if it's in the wrong forum.

My father passed away last year. Mother is still alive. Her own will is written in the same way.

Solicitor arranged Dad's will so that after his death there is a 2 year window where half the property can be moved to my sister & myself , it was set up like this back in the 90's to avoid inheritance tax. If nothing is done then after 2 years Dad's half of the property is automatically passed to Mother. IHT is no longer an issue as the threshold has increased but now there would still be an advantage to do this to avoid care home fees if mother should fall ill with a serious long term illness. (She is 90) My sister & I are trustees of the will (mother renounced her responsibility to be an executor due to failing eyesight) & and as such are given complete discretion what to do with Dad's half but Solicitor seems to feel completely uncomfortable with this and is suggesting the following:

We thought this would be simple but solicitor seems to be making a huge & expensive event out of it claiming conflict of interest.

1. She says as she would be acting for Mother she can't act for us as well. She wants to meet Mother 1:1 to make sure Mother is happy with the transfer of half the property cost £300 - £450 + VAT

3. She wants us to instruct an independent solicitor to give us legal advice

4. Then she wants to speak to that solicitor to explain the situation - cost £100 + VAT

Her Transfer fees would be £500 +VAT plus land registry fee £80.00

In addition to this we would have legal fees (and conveyancing costs)??

I would be interested to know your thoughts. Mum is very happy to pass half ownership of the property to us. She understands why. She has a wealth of appx £200K plus the property is worth £200K. So if she did have to go into a care home (heaven forbid) she would have a wealth of £300k

System

TBH if all involved are happy for the transfer to go ahead then there is very little reason, apart from to line her and her mates pockets, that a solicitor needs to be involved.

00ec25

from a professional integrity point of view the solicitor is entirely correct to say she cannot represent both you and your mother, to do so would be a serious breach of professional ethics

as for the viability of the proposal then it is for you and your mother to metaphorically flip a coin given:

a) the combined valued of father's and mother's estate (apprx 400K apparently) is well within the IHT limit (650k) meaning IHT is not an issue any more (assuming father has not made any significant bequests you have not mentioned).

b) transferring father's share of the property to you& sister therefore results in you being exposed to Capital Gains Tax. I assume you & sister do not live with mother and therefore you would lose some of the value of the estate through paying CGT whereas if father's shares passes to mother and the whole 100 % then eventually passes to you on her death no tax would be payable at all

c) if fathers share does revert to mother then as you rightly say it is exposed to care home fee issues

decide which is going to cost more between b) and c) ....

Siskin

Sister & I don't live with Mother.
How can I work out the CGT ?

00ec25

Siskin wrote: »

Sister & I don't live with Mother.
How can I work out the CGT ?

the increase in value between its open market value at the point in time mother gives it to you and the value at the point in time you eventually sell it = the gross gain
from that you can deduct your personal allowance (currently £11,000 @14/15 rate) to give the net taxable gain
you will pay CGT at 18% or 28% on the net taxable gain depending on your total income in the tax year of sale

kidmugsy

Siskin wrote: »

.

1. She says as she would be acting for Mother she can't act for us as well.

Bloody right.

If you want to avoid CGT, then you and sis just sell your half of the house to Mum as soon as it's been transferred from your late father's estate to you.

xylophone

I have a relative whose aged parent at 90 was coping with living alone.

At 92, she very definitely was not coping, the house had to be sold and she went into a residential home - the fees are close on £4000 a month.

In your position, ( and I am not a solicitor!) I would do as the your mother's solicitor suggests because a trust will be involved and the tax position can require care - you would also wish to be sure that the conveyancing was correctly carried out.



Have a look here http://www.primewills.co.uk/will_writers_cambridge.htm at protecting the interests of the surviving spouse.

http://www.hmrc.gov.uk/trusts/index.htm

If there is still cash in the executor's account, it seems to me that paying the fees of both solicitors from that account would be legitimate - otherwise, your mother could pay her own fees and you and your sister yours, although your mother might choose to pay both.

Do you have POA for your mother- if not, it would be as well to get it? https://www.gov.uk/power-of-attorney/overview

PasturesNew

kidmugsy wrote: »

Bloody right.

If you want to avoid CGT, then you and sis just sell your half of the house to Mum as soon as it's been transferred from your late father's estate to you.

No ... it is the mother's already, she's transferring it (potentially) to the OP (to avoid it being locked up for years if she goes into a care home.

With the sums involved, it's unlikely that half of the value would ever be used in care home fees (due to age of mother), but [a] you never know and it'll be locked up all those years.