Is there a problem when downsizing house after spouse death with tenant in common

Margot123

Write all your questions down, and ask your solicitor when you see them.
They are the best ones to advise.

SevenOfNine

What happens should there only be surviving spouse & daughter, therefore the life interest has kicked in, but the daughter subsequently dies before the surviving parent? Could that mean that her interest in this trust passes to HER beneficiaries (& one would need a crystal ball to determine who that might be xxx years in the future)?

If surviving spouse wants to downsize, shouldn't the capital that would probably become available be invested with any/all interest paid to the spouse who has a life interest. Or would it need to be 'written in' that the trustees (assuming survivor & daughter) can decide themselves what can be done with the trust asset (& any part of it) at any point in time?

I think GetMore has given some good pointers & YM99 & Margot are spot on, write down ALL questions & see a good solicitor - it will not be cheap, & if it is it may not cover ALL eventualities or give enough freedom for manoeuvring.

We've been looking into this ourselves but I'm not convinced its ALL necessarily positive.

Yorkshireman99

I would just add that if a trust is suggested stop there and go and see a trust specialist who is a STEP member. They have much more expertise in that field that the average High Street solicitor.

getmore4less

SallySunshine wrote: »

Thanks getmoreforless,
That sounds more like what we hoped what making her a tenant in common would be like, nothing until the second death.
Not sure what you mean re CGT purpose?

Immediate post death interest is the type of trust you are looking at(there are other option)

The full property remains in the estate of the survivor no cgt on second death but does count for IHT.

The will and trust can be written with death of daughter and descends in mind.

SallySunshine

Thanks getmore4 less,
think it's sussed now, solicitor was very helpful and did point out some pitfalls about old will in which things are obsolete now owing to new rules.
waiting now for drafts of new wills.
I have been researching and trying to see if I have missed out anything I should need to ask.
I have also read some posts by posters on other forums here and again found some other good points

getmore4less

The biggest change was transferable nil rate band(2007) which did away for nil rate band trusts in many cases simplifying things for everyone.

SallySunshine

Just had my mind boggled on reading this example from Gov website on downsizing.

.Example 1
A widow sells a home worth £400,000 in August 2020 and moves to a home worth £210,000. At the time of the sale the available RNRB is £350,000 as, had she died at that time, her executors would be able to make a claim to transfer all the unused RNRB from her late husband. By downsizing, she has potentially lost the chance to use £140,000 or 40% of the available RNRB which could have applied had the more valuable home not been sold.

When the widow later dies in October 2020, the home is worth £225,000 and is left to her children together with £500,000 of other assets. The estate can use an RNRB of £225,000. However, the widow was eligible for an RNRB of £350,000 had she not downsized. The estate can therefore claim an additional RNRB of 40% of the available RNRB (40% x £350,000) or £140,000. This would give a total RNRB of £365,000 (£225,000 + £140,000). But this is more than the maximum available RNRB (£350,000) so the additional RNRB is restricted to £125,000 to ensure that the total amount used does not exceed the maximum available.

In addition, the existing nil-rate band together with any transferable nil-rate band claimed from her late husband’s estate can be applied to the remaining assets in the estate.