Help advice needed.

ralphy1967

Hi all, unsure if I am on the right thread for the advice I need but hear goes.

My father who is 75 is getting married in 5 weeks time and wishes to hand his house which he owns to his three children before he ties the knot and moves away. We are planning to sell the property and split it three ways. The house is worth around £150k

What we are concerned is the IHT implications. What we are lead to believe is if he dies within 7 years then their could problems.

What can happen if this is the case?

Has anyone had any experience with this sort of scenario?

Thanks for reading and any advice will be greatfully accepted

Cheers

Marty

dc197

If your father's entire estate is worth less than £325K when he dies, there is no inheritance tax.
If the house is 150, does he have more than 175 in cash and possessions? If not, don't worry.

https://www.gov.uk/inheritance-tax/overview

G_M

dc197 wrote: »

If your father's entire estate is worth less than £325K including the house if he dies within 7 years when he dies, there is no inheritance tax.
If the house is 150, does he have more than 175 in cash and possessions investments etc? If not, don't worry.

https://www.gov.uk/inheritance-tax/overview

If he did not gift you the house now, presumably he would keep it and it would stay in his estate and be subject to Inheritance Tax (if over the £325 limit)?

By gifting it to you, yes, if he died next year, it would be in his estate, so tax would be the same as above.

But if he lives longer, then the tax would reduce pro rata until 7 years had passed, after which the property would be 100% outside his estate.

Others potential issues:

* will he have somewhere else to live, and enough cash to live off?
* what if he moves in with his new wife, and then divorces - would he be homeless? Or if she died, might she leave her property to her children leaving him homeless?
* if he went into a care home, the fact that he'd gifted his property would be considered 'deprivation of assets' so he may not qualify for council funding

ralphy1967

Thanks for both your responses, upon reading the IHT page it is quite confusing, his assets are not worth over £325k but the way I read it I will still have to pay if he dies within 7yrs as its a gift

Marty

Hoploz

If his estate is worth less than the threshold no tax is due.
Tax is payable only on estates worth over 325k.
Estates worth below this are not subject to tax, so it doesn't matter if he gifts it to you within 7 years or not.

FBaby

Have you considered the implication if he goes into care? presumably, his wife to be is aware of his intentions?

McKneff

He needs to see a solicitor.

He cannot just give his property away....... ]
What happens if he needs to go into a home, could you and your siblings afford over 2k a month to pay for him to stay there.
There are so many other implications.,
What does his new wife think to this idea.

ralphy1967

Hoploz wrote: »

If his estate is worth less than the threshold no tax is due.
Tax is payable only on estates worth over 325k.
Estates worth below this are not subject to tax, so it doesn't matter if he gifts it to you within 7 years or not.

cheers for the info

ralphy1967

FBaby wrote: »

Have you considered the implication if he goes into care? presumably, his wife to be is aware of his intentions?

His wife does know of his intentions and is fine with it, she too has kids and the house they are moving into together is in joint names, all paid for, obviously.

What could be the implications if he goes into care? Does the state not pay for it, he's worked all his life and if things do take a turn for the worse and he has to go into care then surely he must get some support or is that for the people who have not worked a single day, sponging of the government, have 3 televisions, a car and go on one big holiday a year. Sorry I went off on one their!

Cheers

Marty

ralphy1967

McKneff wrote: »

He needs to see a solicitor.

He cannot just give his property away....... ]
What happens if he needs to go into a home, could you and your siblings afford over 2k a month to pay for him to stay there.
There are so many other implications.,
What does his new wife think to this idea.

Its what he wants to do, he doesn't want his new wife-to-be to have it, they have bought a house already.

We haven't talked about if he needs to go into a home scenario, he has another property with his new wife so does that have to be sold, I don't know, this is really hard

Cheers

Marty

Nobbie1967

ralphy1967 wrote: »

His wife does know of his intentions and is fine with it, she too has kids and the house they are moving into together is in joint names, all paid for, obviously.

What could be the implications if he goes into care? Does the state not pay for it, he's worked all his life and if things do take a turn for the worse and he has to go into care then surely he must get some support or is that for the people who have not worked a single day, sponging of the government, have 3 televisions, a car and go on one big holiday a year. Sorry I went off on one their!

Cheers

Marty

As long as he is in good health now and is not doing this to avoid paying for care home costs then he should be ok, but probably worth searching this site under 'deprivation of assets' to get a bit more info on the details.