Inheritance tax worry

Apodemus

Dogfeatures wrote: »

But I was thinking today re: the Land Registry option....that surely what might be simple is the sister who is ill signs over her half now to the other sister, while she is still able to do so? As far as I know, she has no other family to leave her estate to, and is in the same position re: cash in the bank or savings (2 pensions only as income and some very modest savings.)

Others more knowledgeable will be able to confirm, but I would have thought if the ill sister gifts her share of the property, she would need to survive 7 years for the value of the gift to be removed from IHT liability (with a taper from 5 years). Sadly, if she already has a terminal diagnosis this option might not work.

tyllwyd

Does the sister have any savings or life insurance? There might be some money available in the estate that would help to reduce the impact of the IHT.

getmore4less

Dogfeatures wrote: »

Thank you everyone for some very good answers. There is a lot to think about. But I have so much I can show to her now, and there obviously ARE options. (I know nothing at all about this as I've never encountered IHT in any personal dealings.)

But I was thinking today re: the Land Registry option....that surely what might be simple is the sister who is ill signs over her half now to the other sister, while she is still able to do so? As far as I know, she has no other family to leave her estate to, and is in the same position re: cash in the bank or savings (2 pensions only as income and some very modest savings.)
The only real item in her will would be half of that house and land.
I'm sorry I don't know fine details of their joint ownership, but only know it's half-and -half ownership. The house was bought for cash in 2014 after the 2 sisters sold their mother's house after her death. I presume IHT was paid on that too. But what was left was enough for them to buy their current home and land. (It's the land which pushed the price up so high. The bungalow is probably worth about 280-350,000 on its own.)

Well thank you for all your thoughtful responses. They are very helpful indeed.

it was(is) not clear but do they both live in the place.

two issues.

if she does not live there will be CGT assessment on the gift.
if she does life there gift with reservation, IHT problem still exists.

Mitigating IHT issues is going to be hard unless there are other people to give the assets too.


Seems they may have missed an opportunity to have a decent place to live and more cash for improved lifestyle.

it won't be easy these situations never are there may still be time to look at alternatives, depends on the prognosis, months or years if any benefit can come to the ill sister.


the right solution really depends on what the second sister plans are as there may be option to keep at least a nil rate bands worth out of her estate, that would need some expert advice.

although it might be secondary to illness but some IHT planning is urgently needed.

Did they not take advice in 2014?

Keep_pedalling

Unanswered question, is she a widow?

xylophone

is the sister who is ill signs over her half now to the other sister, while she is still able to do so?

If the sister who is terminally ill owns her half as tenant - in- common and gifts the house to her sister now, it would still fall into the deceased's estate for IHT purposes.

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

xylophone

Unanswered question, is she a widow?

The transferable nil rate band covered in link in post 18.

Where an estate qualifies for spouse or civil partner exemption, the unused proportion of the nil-rate band when the first of the couple dies can be transferred to the estate of the surviving spouse or civil partner, sections 8A-C IHTA. The nil-rate band can be transferred when the surviving spouse or civil partner dies on or after 9 October 2007, irrespective of when the first of the couple died,