The will and tax liabilities of property

Moby

My mother is terminally ill and has asked me to help her with some decisions. I am one of her four children. She has a house which will be sold and shared equally between her four children after the remaining equity has been paid to the mortgage company.

One of my siblings is profoundly autistic and is in a care home. How do I protect his interests. I am worried that his proportion of the house sale proceeds will be swallowed up by the state by it having to go towards his ongoing care costs. Is there a way of avoiding this and/is it a risk to start with?

I am frankly clueless about what actually happens when a parents home is sold and shared between the children. Are there tax liabilities that have to be paid and if so at what level do they kick in. The property is worth about £180k and I estimate that after the mortgage company has been paid off, that would leave (before considering any tax liabilities) about 30k to share between for siblings. Any advice gratefully received.

Crabapple

The best option would be for your mother to make a new Will if she is able. See a Solicitor and ask about part of the Estate being put into Trust so it is not given absolutely to your sibling.

It may not be a risk, it rather depends how the care is funded - if it is paid for by the NHS on the basis of medical need or by the local authority. If the LA pay they will certainly expect contributions to be made from any funds held by the person themselves.

g6jns_2

Moby wrote: »

My mother is terminally ill and has asked me to help her with some decisions. I am one of her four children. She has a house which will be sold and shared equally between her four children after the remaining equity has been paid to the mortgage company.

One of my siblings is profoundly autistic and is in a care home. How do I protect his interests. I am worried that his proportion of the house sale proceeds will be swallowed up by the state by it having to go towards his ongoing care costs. Is there a way of avoiding this and/is it a risk to start with?

I am frankly clueless about what actually happens when a parents home is sold and shared between the children. Are there tax liabilities that have to be paid and if so at what level do they kick in. The property is worth about £180k and I estimate that after the mortgage company has been paid off, that would leave (before considering any tax liabilities) about 30k to share between for siblings. Any advice gratefully received.

From what you say each sibling would get a maximum of £7,500 which is well below the £16,000 threshold for care costs to be paid. You might want to consider put some or all of the state into a trust for the disabled sibling.

Mojisola

Moby wrote: »

I am frankly clueless about what actually happens when a parents home is sold and shared between the children.

Are there tax liabilities that have to be paid and if so at what level do they kick in. The property is worth about £180k and I estimate that after the mortgage company has been paid off, that would leave (before considering any tax liabilities) about 30k to share between for siblings.

Your mother's estate won't have to pay any inheritance tax unless she leaves over £325k.

It won't be worth setting up a trust for £7k+.

Moby

Apologies meant to say after mortgage has been paid off the remaining sum is 30k each not between us. Does this necessitate a trust being set up?

theoretica

I think that it would be worth setting up a trust - not least because it makes clear who is to look after finances for your brother, which I imagine someone will need to do.