New House, Inheritance quiery

Daisy_1990

Hello
My 84 year mother is in the process of selling the house she owned with my father (now passed away) for a smaller property. Before my father died they put special measure in place so that half of the house (my fathers part of the house) would be split into thirds and myself and my two siblings would receive this in the event of my mother then passing (Also to add, in the even of my mothers death, my mothers half of the house would again be split into thirds).
I have two questions, with my mother downsizing and the new house costing considerably lower than the house she has selling, I would just like to know where we stand as a family in regards to my fathers share of the house. Especially as this will be used to pay for part of the new house
Also my mother has now got a new partner who will be moving with her, again we would like some advice on how my fathers share of the house will be protected and in the event of my mothers death how would be then go on about selling the house afterwards if my mothers partner wishes to stay.
Any help would be greatly appreciated

AnotherJoe

Surely no coincidence there can't be two of these 84 year old mums with a new friend ? https://forums.moneysavingexpert.com/discussion/5995415/ownership-of-house

AnotherJoe

P.s. I don't think you stand anywhere as a "family", when the current house is sold the three, one sixth portions of the proceeds should be passed to the siblings since it's theirs. Simples.
Unless they all (or just some..) wish to give it to their mum, or loan it to their mum though to protect the money putting a charge on the house is probably advised. Then there's the remaining cash floating around. If its in mums account and she starts having world cruises then how would you protect that?
What you and the original post don't say is what the position of the partner is. Are they married for example? Will he contribute to the purchase or is he just a gold digger ?
If he's just a gold digger then kick him out when she dies he'll just be a lodger. Unless she leaves her portion or the whole house to him in her will of course.

p00hsticks

AnotherJoe wrote: »

P.s. I don't think you stand anywhere as a "family", when the current house is sold the three, one sixth portions of the proceeds should be passed to the siblings since it's theirs. Simples.

Although if the children aren't currently living in the house they may need to pay capital gains tax on their share of the proceeds - hopefully a proper RICS valuation of the property was made when the father died to allow any CGT liuabilty to be calculated.

xylophone

Do you mean that when your father died, he left you his half interest?

None of you are living in the property?

Was the house valued when your father died?

Has it increased in value since?

Has the question of CGT for you and your siblings been considered?

Are you gifting/lending your share of the proceeds to your mother to enable her to buy another property?

Cakeguts

From what I understand of these sorts of arrangements they don't work unless there is a trust involved. So if you don't have a trust the money that is in the house from when your father died should have been paid to you out of his estate by the house being sold at that time. As it hasn't you have been lending your mother some money. When the house is sold that money that belongs to you will be assessed for tax. Your mother will not have it to invest in her new house unless you give it to her or lend it to her.



As I understand it you don't own any part of your mother's house what you own is a sum of money from your father's estate.

da_rule

Cakeguts wrote: »

From what I understand of these sorts of arrangements they don't work unless there is a trust involved. So if you don't have a trust the money that is in the house from when your father died should have been paid to you out of his estate by the house being sold at that time. As it hasn't you have been lending your mother some money. When the house is sold that money that belongs to you will be assessed for tax. Your mother will not have it to invest in her new house unless you give it to her or lend it to her.



As I understand it you don't own any part of your mother's house what you own is a sum of money from your father's estate.

No, the will can create a trust (known as a will trust). It is perfectly normal and possible for shares in property to be passed by a will, the property does not have to be converted into cash for the gift to be effective. If I have a house and leave it to my child then they become the owner (they would use a deed of assent). The only time the property may have to be sold is if my debts outweighed by liquid assets.

In this instance it seems that mum and dad owned the property as tenants in common. Dad left his share to the 3 kids but gave mum a life interest in it. This means that the 3 kids owned it but couldn’t sell it etc except in the circumstances set out in the will (usually when the person living there moves out of their own free will or dies etc).

Now that the property is being sold, all 4 parties have to agree (mum and 3 kids) and all sign the transfer deed.

The proceeds of sale will then be split, 50% to Mum and 1/6th to each kid, UNLESS, the will specifies that mum is allowed to sell the property in order downsize and use the proceeds of sale to purchase the new house.

If that isn’t the case then the kids can either gift or loan their mum as much of the sale price as she needs to buy the property. A loan, secured by a charge would probably be better.

However, as has been said previously, depending on the value of the property when the dad died (for which there must be at least a ballpark valuation in existence as it would have been needed for IHT purposes) and the price it is sold for, there may be capital gains tax liability.

The fact that your dad gifted his share in the property directly to you, and not to your mum means that he didn’t take full advantage of the spousal exemption and as such your mum will have less to roll over from his estate.

In relation to the new partner, there’s an issue you haven’t addressed; does your mum want him to have a share in the property? If he’s putting funds in or even if your mum just wants him to have part of her share then there isn’t much you can, or should, do. If your mum doesn’t want this then you could get him to sign an acknowledgement that he isn’t contributing to the sale price and doesn’t therefore have an interest. These agreements are somewhat questionable as there are ways (such as a constructive trust) whereby someone can gain an interest in the property after it has been purchased. If your mum also wants to avoid this then she’ll need specialist advice.

Exodi

Well, excusing the contradiction of the children shouting 'gold-digger' at their mothers new partner, I think this whole situation sits on a knife edge. If the children 'obstruct' the purchase of the bungalow, not only can I imagine the mother swiftly revising her will, it makes you wonder whether the father would have been happy with his children holding his wife to ransom over their inheritance?

Realistically you can 'reinvest' your sixth on the provision a charge is placed on the property but you shouldn't dictate how your mother should split hers when she passes - she's perfectly entitled to give it all to her new partner if she so pleases, it's not your money.

kazwookie

As already stated another 84 year old with a new gentleman friend...........

I suggest the family get together and have a discussion.