The best way to do wills?

DevilsAdvocate1

Hi,

My dad has been asking me for some advice on the best way for him and mum to do their wills. Mum is 85 and dad is 75.

Mum has made a will leaving everything to me. Their house is held in such a way that they each have their own half so it doesn't pass to the spouse on death.

Dad is worried that I will have to pay a lot of tax on mum's estate and is trying to persuade her to change the will so that they have mirror wills and when the second one dies the estate will pass to me (I'm an only child).

He hasn't said as much, but I think what he is worried about is that I won't be able to afford any tax due and so might have to sell the house to pay the tax.

What is the tax threshold? I think their estate is likely to come under this. However, dad thinks that as its unearned income, I would have to pay income tax on any inheritance. Is this correct?

There is no way I'd force my dad to sell. I'd take out a loan if necessary to pay any tax.

Their house is worth around £220K and I think mum might have around £20K in savings plus a small amount of jewellery.

Thanks.

SeniorSam

Your parents each have an allowance against inheritance tax of £325,000. Therefore if their estate in total is less than £650,000 when they have both died, no inheritance tax will be payable, so don't worry.

It wouild be better for both parents to make their Wills and I would suggest that you check with solicitors and find one that will charge a reasonable amount. Make the Executors of the Wills, the spouse and yourself. In that way there will be the two of you to deal with matters. If you need help and guidance, you could then ask a professional. If you make a professional person an executor, their charges may mount up considerably.

Sam

DevilsAdvocate1

Thanks. I think dad is worried that I would be able to make him homeless, which I wouldn't do. However, mum is worried that he would bypass me and give everything to my kids or to a new woman. She's always been convinced he'd remarry (I don't think this).

Newly_retired

I presume you mean they are tenants in common?
Your mum can write her will to leave her share of the property to you, but for your dad to have a life interest so he can live in it for the rest of his days, before it comes to you, if that is what would suit you. It would mean you could not cash in your inherited share until your dad dies.
They need a solicitor to make sure this is worded properly.

Crabapple

Most of your questions have been answered above, but you mention income tax as well.

You don't pay income tax on an inheritance, only on the income it produces once you recieve it. So interest earned on bank balances, or rental income if it was a rented property. There's nothing for your father to worry about there.

I think it's worth speaking to your parents about making sure each has the right to live in the property as mentioned, with you then getting your inheritance later. If you outright own one half of the property it is yours for such purposes as calculating your assets if you were bankrupt or going through a divorce, so not ideal.

Mojisola

Newly_retired wrote: »

Your mum can write her will to leave her share of the property to you, but for your dad to have a life interest so he can live in it for the rest of his days, before it comes to you, if that is what would suit you.

It's best to also have a clause that allows him to sell up and use the money to buy somewhere else in case he wants to downsize.

Giving him a life interest protects you as well as him - if you needed means tested benefits and had full ownership of your half of his house, you wouldn't be able to claim.

BobQ

If your mother genuinely thinks that her husband might do something she does not want, her will goes a long way to preventing it. I would suggest she seeks independent legal advice before making a change and does not take your father with her to make the will. That said a lifetime interest would be a way of re-assuring him

DevilsAdvocate1

Thanks everyone.

I had a quick chat with my dad last night. I'd invited them both to tea, but only my dad came. She has really been struggling the last few weeks and hasn't left the house since January. Very worried.

Anyway, I brought the subject up. Dad seemed a bit reassured. I also mentioned free wills month, but the nearest participating solicitor is an hour away, despite my area being listed in the current locations. An hour is too far. The current will is not great in that everything is left to me (they've always kept their finances separate). But I have been told verbally to give certain items to certain people. This is not written down, but I will do as asked.

Guess I need to try and find a solicitor who could come to the house. There is nothing in the will at the moment about dad continuing to live in the house. If she died before we sorted something, could we do a deed of variation after to include this?

RAS

If mum was to die tomorrow and mum left everything to you, you and dad become tenants in common. That means that both of you have the right to live in the house.

And neither of you can sell without the consent of the other.

Just for the record; there have been quite a lot of cases on here and the families forum where the surviving parent has re-married and the child/children of the first marriage got nothing/very little when the second parent died because the step-parent inherited it.

Not least because the second parent did not understand that their existing will was rendered invalid when they re-married.