Solicitor's letter 7 months after Probate / Estate closed and finalised

eddyinfreehold

Ignore my earlier post (see above), I made a complete Horlicks of what I was trying to say. KeepPedalling is of course absolutely correct, the Father's estate may be liable to a reduction in nil-rate band allowance should he die within 7 years of gifting part of the value following sale of the house.

Thank you KeepPedalling and my apologies

childofbaahl

That's what I figured but my dad has no estate to speak of really and as it stands, including the value of the house at time of transfer, falls well below the IHT threshold.

Of course I'm pestering him to make a will so that this kind of issue won't resurface and I'm already looking into getting mine done too.

Tom99

[FONT=Verdana, sans-serif]Would it be advisable for the father to sign a deed of variation in respect of the 50% of the house he inherited, just in case his estate is liable to IT?[/FONT]
[FONT=Verdana, sans-serif]Or is that not possible?[/FONT]

Keep_pedalling

Tom99 wrote: »

[FONT=Verdana, sans-serif]Would it be advisable for the father to sign a deed of variation in respect of the 50% of the house he inherited, just in case his estate is liable to IT?[/FONT]
[FONT=Verdana, sans-serif]Or is that not possible?[/FONT]

The OPs father did not inherit the house, he already owned it as a joint tennant with his ex, which for inheritance purposes means the house is not part of the estate, so a DoV is not appropriate.

noh

Tom99 wrote: »

[FONT=Verdana, sans-serif]Would it be advisable for the father to sign a deed of variation in respect of the 50% of the house he inherited, just in case his estate is liable to IT?[/FONT]
[FONT=Verdana, sans-serif]Or is that not possible?[/FONT]

He didn't inherit 50% of the house. The house was owned as joint tenants he therefore already owned 100% of it along with his ex wife.
If the house had been held as tenants in common then they each would have owned a proportion usually 50% each.

Tom99

Keep_pedalling wrote: »

The OPs father did not inherit the house, he already owned it as a joint tennant with his ex, which for inheritance purposes means the house is not part of the estate, so a DoV is not appropriate.

[FONT=Tahoma, sans-serif]I am not convinced of that:-[/FONT]
“[FONT=Tahoma, sans-serif]IHT provisions: assets that can be redirected[/FONT]

[FONT=Tahoma, sans-serif]For IHT purposes, a variation can redirect any asset that is in a [/FONT][FONT=Tahoma, sans-serif]deceased's estate immediately before his death[/FONT][FONT=Tahoma, sans-serif] ([/FONT][FONT=Tahoma, sans-serif]section 142(1)(a), IHTA 1984[/FONT][FONT=Tahoma, sans-serif]). This includes:[/FONT]

• [FONT=Tahoma, sans-serif]Assets that pass outside the terms of a will or the intestacy rules, such as joint assets that pass by survivorship or nominated assets.”[/FONT]

[FONT=Tahoma, sans-serif]
The highlighting is mine.[/FONT]

Keep_pedalling

Tom99 wrote: »

[FONT=Tahoma, sans-serif]I am not convinced of that:-[/FONT]
“[FONT=Tahoma, sans-serif]IHT provisions: assets that can be redirected[/FONT]

[FONT=Tahoma, sans-serif]For IHT purposes, a variation can redirect any asset that is in a [/FONT][FONT=Tahoma, sans-serif]deceased's estate immediately before his death[/FONT][FONT=Tahoma, sans-serif] ([/FONT][FONT=Tahoma, sans-serif]section 142(1)(a), IHTA 1984[/FONT][FONT=Tahoma, sans-serif]). This includes:[/FONT]

• [FONT=Tahoma, sans-serif]Assets that pass outside the terms of a will or the intestacy rules, such as joint assets that pass by survivorship or nominated assets.”[/FONT]

[FONT=Tahoma, sans-serif]
The highlighting is mine.[/FONT]

There is a difference between how a house owned as JTs for inheritance purposes and for IHT purposes. Although a house falls into sole ownership on the death of the other JT and is excluded from the inheritable estate, for tax purposes it's treated as though each has 50% ownership.

Tom99

Keep_pedalling wrote: »

There is a difference between how a house owned as JTs for inheritance purposes and for IHT purposes. Although a house falls into sole ownership on the death of the other JT and is excluded from the inheritable estate, for tax purposes it's treated as though each has 50% ownership.

[FONT=Verdana, sans-serif]Yes that's right. A joint asset is part of the estate for IT purposes therefore it can be redirected using a DOV.[/FONT]

Keep_pedalling

Tom99 wrote: »

[FONT=Verdana, sans-serif]Yes that's right. A joint asset is part of the estate for IT purposes therefore it can be redirected using a DOV.[/FONT]

DoVs are used to prevent an inheritance ever coming part of your estate for IHT purposes. They are used where someone inherits through a will or through the laws governing intestate estates. The don't work with property held as JTs as the whole property becomes a part of the survivor's estate immediately the other party dies.

Tom99

Keep_pedalling wrote: »

DoVs are used to prevent an inheritance ever coming part of your estate for IHT purposes. They are used where someone inherits through a will or through the laws governing intestate estates. The don't work with property held as JTs as the whole property becomes a part of the survivor's estate immediately the other party dies.

[FONT=Verdana, sans-serif]The survivor of a joint asset inherits the decease's share and the deceased share is part of the decease's estate for IT purposes. Therefore I think the decease's share of a jointly owned asset can be redirected by a DOV.

[/FONT] [FONT=Verdana, sans-serif]The IT Act uses the words:-

[/FONT] “[FONT=Verdana, sans-serif]effected by will, under the law relating to intestacy or otherwise”

[/FONT] [FONT=Verdana, sans-serif]Note the word “otherwise”.[/FONT]