living in house inherited by several memebers of family

mkcj

Father owned own home and lived with one of his 4 children.

Father died intestate so each of 4 children inherits quarter share of house, one child has died so there share split for their children.

Children agree that daughter that was living in the home can live there for rest of her life, she will be responsible for maintenance but other than that will live rent free. All children are adults.

Given the age of the daughter she could live for at least 30+ years

What are the implications for this.

Will a trust need to be set up? Or are all inheritors named on the deeds and a letter of agreement would be all that was necessary?

What are the tax implications, capital gains tax?

House was well below the inheritance tax threshold at probate.

Executors could be dead when house eventually sold does this matter?

I know that it will be necessary to see a Solicitor but want to get an idea of the implications, what problems might occur and the best way to avoid them and any questions I should be asking a Solicitor, I am one of the children.

Sorry for the long post, would be grateful for any advice.

getmore4less

not entirely clear but if the 3 surviving children and the issue(children) of the deceased child are all adults then.

Deed of variation to create a life interest trust.
requires all beneficiaries to agree.

trustees/legal owners might be worth looking at the younger generation fore those.

check the life interest will be a immediate post death interest in possession for IHT/CGT purposes.

Would the occupier be interested in buying out the interest of any of the other beneficiaries.

The biggest issue is often long term maintenance

mkcj

Thank you very much for your advise.


Yes all are adults.




"check the life interest will be a immediate post death interest in possession for IHT/CGT purposes."




Please could you explain this please?


At the moment probate has been applied for but nothing else has been done.

getmore4less

mkcj wrote: »

Thank you very much for your advise.
Yes all are adults.

"check the life interest will be a immediate post death interest in possession for IHT/CGT purposes."
Please could you explain this please?

At the moment probate has been applied for but nothing else has been done.

You need to research(get advice) what happens with the various options and how the IHT and CGT liabilities are allocated.

eg there is a difference between just letting the person live there or giving that person a life interest(that creates a trust) you also want to look to see if there are any alternatives that may be better for everyone.

Do any of the current list of beneficiaries get any benefits, they will need to check what the effect of their gift will be if they agree to a DOV.

Yorkshireman99

mkcj wrote: »

Father owned own home and lived with one of his 4 children.

Father died intestate so each of 4 children inherits quarter share of house, one child has died so there share split for their children.

Children agree that daughter that was living in the home can live there for rest of her life, she will be responsible for maintenance but other than that will live rent free. All children are adults.

Given the age of the daughter she could live for at least 30+ years

What are the implications for this.

Will a trust need to be set up? Or are all inheritors named on the deeds and a letter of agreement would be all that was necessary?

What are the tax implications, capital gains tax?

House was well below the inheritance tax threshold at probate.

Executors could be dead when house eventually sold does this matter?

I know that it will be necessary to see a Solicitor but want to get an idea of the implications, what problems might occur and the best way to avoid them and any questions I should be asking a Solicitor, I am one of the children.

Sorry for the long post, would be grateful for any advice.

Make sure you use a solicitor who is a STEP member. If the children of the deceased beneficiary are under 18 there then a DOV is not possible in which case the house might have to be sold.

Tuesday_Tenor

I don't think that more than 4 people can legally own a house .....?

So there might need to be some sort of trust/mechanism to get round this. (Whether or not there is a trust needed for the permission to lve there v. Life interest)

You need the solicitor, but it's good you're trying to understand the issues and questions to start with.
.

Yorkshireman99

Tuesday_Tenor wrote: »

I don't think that more than 4 people can legally own a house .....?

So there might need to be some sort of trust/mechanism to get round this. (Whether or not there is a trust needed for the permission to lve there v. Life interest)

You need the solicitor, but it's good you're trying to understand the issues and questions to start with.
.

Four joint owners is the maximum allowed. The OP and his siblings need to consider if the house is suitable for one person to live in long term e.g. would a smaller property be more appropriate now, or in the future. Liability for repairs and insurance to be paid by the occupant also need to be specified, and enforced, to ensure the value of the property is maintained. How is the capital value of the house to be divided between the joint owners? For example is the one who is going to be resident rent free going to have their cake and eat it i.e. is their percentage share of the capital value going to be reduced to reflect the value of living there rent free? They may all agree now but what happens if one changes their mind in future and forces a sale? Given the disputes that we have heard about on this forum the whole scheme could be a recipe for future conflict. Selling the house and dividing the proceeds now might be a better option.

mkcj

Thank you for your thoughts, lots to think about.

securityguy

I confess that were I one of the siblings I would just gift my share to the sibling who is going to live there. The chances are that this is a situation in which a non-working sister will be left with a house too large for her to maintain, and which would be a nightmare of both internecine and LA squabbles were she to need care later in life, and the best thing to do would be to downsize, soon, to something more suitable and use the remaining money to pay the bills. Otherwise, it's likely the other siblings are going to have to pay to maintain and insure a house which it is possible, but not at all certain, they might see some return on in 30 years' time, but on which they would need to pay a lot of CGT even though they have funded it from their net income. And as the years go by, the "shrine to the dead parents" "family home" air to proceedings is going to become a greater and greater impediment to sensible decision making.

The other siblings aren't going to get much money, and not for 30 or more years anyway. It will complicate their finances going forward. If the house needs a new roof or rewiring, which I suspect the sister living there would not be able to fund in a million years, they are going to be on the hook for it. If one of them can't afford their "share" there is going to be a lot of trouble. I would just accept that I'm not going to get anything from it and leave it to the new owner to resolve.

Yorkshireman99

securityguy wrote: »

I confess that were I one of the siblings I would just gift my share to the sibling who is going to live there. The chances are that this is a situation in which a non-working sister will be left with a house too large for her to maintain, and which would be a nightmare of both internecine and LA squabbles were she to need care later in life, and the best thing to do would be to downsize, soon, to something more suitable and use the remaining money to pay the bills. Otherwise, it's likely the other siblings are going to have to pay to maintain and insure a house which it is possible, but not at all certain, they might see some return on in 30 years' time, but on which they would need to pay a lot of CGT even though they have funded it from their net income. And as the years go by, the "shrine to the dead parents" "family home" air to proceedings is going to become a greater and greater impediment to sensible decision making.

The other siblings aren't going to get much money, and not for 30 or more years anyway. It will complicate their finances going forward. If the house needs a new roof or rewiring, which I suspect the sister living there would not be able to fund in a million years, they are going to be on the hook for it. If one of them can't afford their "share" there is going to be a lot of trouble. I would just accept that I'm not going to get anything from it and leave it to the new owner to resolve.

I agree 110%. You have put it far more eloquently than I did.

mkcj

I agree with you as well but unfortunately the person living there does not see the problems that may be ahead and the rest of the family want this plan. I agree because I am not willing to disagree with the plan of the others.