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RNRB/IHT Query
PollardUK
Posts: 20 Forumite
Hi Everyone,
I'm looking for clarification/advice on a couple of issues in regard to RNRB/IHT.
Here is a brief timeline of events.
Apr 2009 - My Father begins Divorce proceedings against my Mother, (as a part of this, the tenancy was severed on the house so that they became "Tenants In Common", and my Father also made a will, bequeathing all of his personal and real estate to both myself and my brother).
In his will, he made this stipulation (and I quote),
"No provision for my wife, as we have lived separately although under the same roof for many years and she is not financially dependent upon me having her own income and capital resources including her half share of the house".
June 2013 - My Father was still in the long process, (2009-13), of divorcing my Mother, when he unexpectedly passed away, so legally, he was still married to my Mother upon date of death, and as a result of this, the large "cash" proportion of my Father's Estate, (as he had never taken/split ANY of the money that they held together Joint Accounts), reverted directly to my Mother, as she was still legally his Spouse.
He did however leave £80,000 in cash, (that had been held solely in his name), and, his half share of the house, both to be split equally, between my Brother and myself.
I applied for Grant Of Probate, so this amounted to us using £180,000 of his Nil Rate Band for IHT purposes, (i.e. his half share of the house, valued at £100,000 at the time, plus his £80,000 cash),
leaving us with £145,000/approximately 45%, of his unused NRB, to be used as Tax Relief on the Estate, when my Mother eventually passes away.
Since Christmas 2015, we have increasingly had to care for my Mother more and more. Her health has deteriorated markedly since she was diagnosed with Vascular Dementia back in April 2016, and there has been, what has amounted to, a catastrophic change of condition, (since February 2018), so, broadly speaking, for the past three years, we have both become 24/7/365 Carers for my Mother, at an increasingly exponential rate.
A couple of weeks ago, my Mothers care/condition was recategorized to "Palliative", (as she's barely eating/drinking now), but, outside of vascular events or, extremely rapid weight loss, this stage could last a few weeks, months or maybe even a year(s).
The following information may also be pertinent,
1. Mom has never made a valid will, and, no longer has capacity, but, we do have a Lasting Power Of Attorney, for both, Health and Welfare, and, Finances, (both, held "jointly and severally", in terms of making decisions,), that was applied for back in October 2015, and registered in Dec 2015.
2. After my Fathers death, we never got around to changing any of the House Deed details via Land Registry, but, both my Brother, myself, and my Mother have all continued to live together, in the family home, as we did previously.
So, as we stand currently, in her Estate, there is approximately £515,000 in cash, plus, her half share of the house, which could be valued in total, at anything from £200,000-£300,000, (we have been recommended to commission an RICS report/valuation, so that we have accurate and detailed information in regard to this,
for IHT purposes).
So, according to my calculations, Mom will have an NRB value of £470,000 (her £325,000, plus approximately £145,000 unused, from when my Father passed away), and, she will also have her RNRB of £125,000 on the family home.
But, after reading quite a few net articles on this subject, I'm still unsure if we can utilise my late Father's proportion of RNRB in any form, (considering that he passed away before this allowance existed, and in terms of how the house was dealt with/distributed via his will), however, the fact remains that, upon death, he was still legally married to my Mother.
So, these are my questions, (with "time", clearly being a factor, here),
1. Would we be able to use/include my Father's allowance of unused RNRB, (even though his half share of the house, was willed/passed to both myself, and my Brother, and this amount was included in the Tax Calculations for his Estate), when Mom passes away, (assuming for arguments sake, that Mom does pass away in this Tax Year, and that the house is valued at no more than £250,000)?
2. If the above is not an option, what would be the stance, both legally and ethically, on us selling a portion of the house, (that we all co-own), back to our Mother, in order to bring the "cash value" of her Estate down below the IHT threshold?
3. If this is possible, is there a minimum share/amount, that we would need to retain in the house, in order for us to carry on living here, (as obviously, ideally, we would like to maximise ALL potential options, in terms of bringing the value of the Estate down below, or at least to as close as we can get, to being just above, the IHT threshold).
We will be seeking Legal Advice in regard to all of this, and clearly wouldn't break the law or commit fraud, but we would like to utilise any/every "creative" option that we have available.
Any information that anyone could provide, would be very much appreciated,
kind regards
Tim
I'm looking for clarification/advice on a couple of issues in regard to RNRB/IHT.
Here is a brief timeline of events.
Apr 2009 - My Father begins Divorce proceedings against my Mother, (as a part of this, the tenancy was severed on the house so that they became "Tenants In Common", and my Father also made a will, bequeathing all of his personal and real estate to both myself and my brother).
In his will, he made this stipulation (and I quote),
"No provision for my wife, as we have lived separately although under the same roof for many years and she is not financially dependent upon me having her own income and capital resources including her half share of the house".
June 2013 - My Father was still in the long process, (2009-13), of divorcing my Mother, when he unexpectedly passed away, so legally, he was still married to my Mother upon date of death, and as a result of this, the large "cash" proportion of my Father's Estate, (as he had never taken/split ANY of the money that they held together Joint Accounts), reverted directly to my Mother, as she was still legally his Spouse.
He did however leave £80,000 in cash, (that had been held solely in his name), and, his half share of the house, both to be split equally, between my Brother and myself.
I applied for Grant Of Probate, so this amounted to us using £180,000 of his Nil Rate Band for IHT purposes, (i.e. his half share of the house, valued at £100,000 at the time, plus his £80,000 cash),
leaving us with £145,000/approximately 45%, of his unused NRB, to be used as Tax Relief on the Estate, when my Mother eventually passes away.
Since Christmas 2015, we have increasingly had to care for my Mother more and more. Her health has deteriorated markedly since she was diagnosed with Vascular Dementia back in April 2016, and there has been, what has amounted to, a catastrophic change of condition, (since February 2018), so, broadly speaking, for the past three years, we have both become 24/7/365 Carers for my Mother, at an increasingly exponential rate.
A couple of weeks ago, my Mothers care/condition was recategorized to "Palliative", (as she's barely eating/drinking now), but, outside of vascular events or, extremely rapid weight loss, this stage could last a few weeks, months or maybe even a year(s).
The following information may also be pertinent,
1. Mom has never made a valid will, and, no longer has capacity, but, we do have a Lasting Power Of Attorney, for both, Health and Welfare, and, Finances, (both, held "jointly and severally", in terms of making decisions,), that was applied for back in October 2015, and registered in Dec 2015.
2. After my Fathers death, we never got around to changing any of the House Deed details via Land Registry, but, both my Brother, myself, and my Mother have all continued to live together, in the family home, as we did previously.
So, as we stand currently, in her Estate, there is approximately £515,000 in cash, plus, her half share of the house, which could be valued in total, at anything from £200,000-£300,000, (we have been recommended to commission an RICS report/valuation, so that we have accurate and detailed information in regard to this,
for IHT purposes).
So, according to my calculations, Mom will have an NRB value of £470,000 (her £325,000, plus approximately £145,000 unused, from when my Father passed away), and, she will also have her RNRB of £125,000 on the family home.
But, after reading quite a few net articles on this subject, I'm still unsure if we can utilise my late Father's proportion of RNRB in any form, (considering that he passed away before this allowance existed, and in terms of how the house was dealt with/distributed via his will), however, the fact remains that, upon death, he was still legally married to my Mother.
So, these are my questions, (with "time", clearly being a factor, here),
1. Would we be able to use/include my Father's allowance of unused RNRB, (even though his half share of the house, was willed/passed to both myself, and my Brother, and this amount was included in the Tax Calculations for his Estate), when Mom passes away, (assuming for arguments sake, that Mom does pass away in this Tax Year, and that the house is valued at no more than £250,000)?
2. If the above is not an option, what would be the stance, both legally and ethically, on us selling a portion of the house, (that we all co-own), back to our Mother, in order to bring the "cash value" of her Estate down below the IHT threshold?
3. If this is possible, is there a minimum share/amount, that we would need to retain in the house, in order for us to carry on living here, (as obviously, ideally, we would like to maximise ALL potential options, in terms of bringing the value of the Estate down below, or at least to as close as we can get, to being just above, the IHT threshold).
We will be seeking Legal Advice in regard to all of this, and clearly wouldn't break the law or commit fraud, but we would like to utilise any/every "creative" option that we have available.
Any information that anyone could provide, would be very much appreciated,
kind regards
Tim
0
Comments
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I'm not awake enough to comment on anything else, but this is one thing you can't do.2. If the above is not an option, what would be the stance, both legally and ethically, on us selling a portion of the house, (that we all co-own), back to our Mother, in order to bring the "cash value" of her Estate down below the IHT threshold?
As your mother's attorneys, the key thing is that whatever you do must benefit her / be to her advantage. There is no advantage to her in owning more of the house, therefore you can't sell any of it back to her.Signature removed for peace of mind0 -
I think you can use your father's transferred unused RNRB for the simple reason that it did not exist when he died and therefore he could not have use any of it.
'Any additional threshold that’s not used when someone dies can be transferred to their husband, wife or civil partner’s estate when they die. This can also be done if the first of the couple died before 6 April 2017, even though the additional threshold wasn’t available at that time.
The additional threshold and any transferred additional threshold is available if the surviving husband, wife or civil partner:
- leaves a home to their direct descendants
- includes the home in their estate'
https://www.gov.uk/guidance/inheritance-tax-transfer-of-threshold0 -
What happens, as in this case, of intestacy?I think you can use your father's transferred unused RNRB for the simple reason that it did not exist when he died and therefore he could not have use any of it.
'Any additional threshold that’s not used when someone dies can be transferred to their husband, wife or civil partner’s estate when they die. This can also be done if the first of the couple died before 6 April 2017, even though the additional threshold wasn’t available at that time.
The additional threshold and any transferred additional threshold is available if the surviving husband, wife or civil partner:
- leaves a home to their direct descendants
- includes the home in their estate'
https://www.gov.uk/guidance/inheritance-tax-transfer-of-threshold0 -
Assuming family comprises mother and children the whole estate would go to children who are blood relatives so mother has £325k+£145k+£125k+£125k =£720kYorkshireman99 wrote: »What happens, as in this case, of intestacy?
But the £250k RNRB will be restricted to house value say £300k/2=£150k
So total estate today of £515k+£150k=£665k
Allowances that can be used £325k+£145k+£150k=£620k
IHT on £45k but less any other allowances claimed
I can't at the moment see any point in children transferring some of there house share back to mother since it would add the both to each side of the equation, e.g. extra £100k worth of house then:
Estate now £765K
NRB+RNRB = £720k
IHT on £45k
Just noticed OP's comment about transfer being for cash ie children use POA to spend mother cash buying more of house. I am sure this would not be allowed under POA as it clearly is not in mother's financial interest to do so. She already owns 50% of house shared with 2 others so has complete right to live there. Giving her 75% would achieve nothing for her other than swapping cash, which may be of use to her for house equity which, certainly in the short term is not.0 -
Her estate can use the transferable RNRB from your father but there is nothing esle that can be used at this late stage. Unless your mother was in the habit of gifting her annual £3000 git allowance you cannot even use that as that is beyond the authority of her attorneys.
If she survives beyond the 5th April then another £50k will be taken out of IHT.
You could use some of that cash to bring in professionals to help with her care, and it could be used to pay 50% of any urgent repairs on the house but beyond that there is little you can do.0 -
No I don't think so as the RNRB is already capped at say £150k being the value of the 50% share in the house. Mother already has £250k RNRB and whilst this will increase to £300k in April none of this increase can be used.Keep_pedalling wrote: »Her estate can use the transferable RNRB from your father but there is nothing esle that can be used at this late stage. Unless your mother was in the habit of gifting her annual £3000 git allowance you cannot even use that as that is beyond the authority of her attorneys.
If she survives beyond the 5th April then another £50k will be taken out of IHT.
You could use some of that cash to bring in professionals to help with her care, and it could be used to pay 50% of any urgent repairs on the house but beyond that there is little you can do.0 -
it reads like there is none but can we clarify there was no life interest?
If there is the numbers change a lot0 -
No I don't think so as the RNRB is already capped at say £150k being the value of the 50% share in the house. Mother already has £250k RNRB and whilst this will increase to £300k in April none of this increase can be used.
I got confused by the paragraph under point 2 in the original post which reads like her share is worth up to £300k0 -
Keep_pedalling wrote: »I got confused by the paragraph under point 2 in the original post which reads like her share is worth up to £300k
Please can you clarify OP, is house total £300k so Mother's share £150k?0 -
Please can you clarify OP, is house total £300k so Mother's share £150k?
Hi Tom99,
We're unsure of the House price until we get an accurate valuation done, but we're looking at a worst case scenario price of £300,000 (total price, so yes, Moms share would be £150,000 at this value).
kind regards
Tim0
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