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April King

edited 30 November -1 at 1:00AM in Deaths, Funerals & Probate
64 replies 7.3K views
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  • edited 3 October 2019 at 2:59PM
    AnotherJoeAnotherJoe Forumite
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    edited 3 October 2019 at 2:59PM
    {Edited by Forum team}


    IMNSHO you are storing up a lot of trouble for your children there ,and possibly for you.

    Suppose that the survivor of the two of you decides that actually they'd quite like to live in that nice care home up the road on the proceeds of the house rather than the scruffy council run one ? They wont be able to because theyve given half the house away Or, youw ant to move into a flat? Maybe the kids dont like it and wont let you.
    As for letting one live in house but other not lose out, that is squaring the circle and making for arguments among siblings. Sell it and be done.
  • getmore4lessgetmore4less Forumite
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    SeniorSam wrote: »
    That's logical. The spouse is the one who would be the life tenant and be protected in the home until they die. With the children as the beneficiaries, they do not inherit until the spouse has died, after which it would pass to the children together with any other assets that the spouse has left to them.

    Perhaps you would be kind enough to clarify the point that if half the house is left to the children in Trust , with life tenancy for the spouse and that half value is greater than the nil rate band amount, would tax be payable then or not and why as it is a gift greater than that allowance.

    Will gifts going into a IPDI trust, where the life tenant is the spouse(include civil partner), get the full spouse exemption.

    It is as if the gift was directly to the spouse for IHT purposes.
  • MojisolaMojisola Forumite
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    We need to set something up within our wills to ensure that if either one of our adult children have a need to remain in the property they can do so but at the same time I do not want to deny either one of them their inheritance.

    We have allowed for the possibility that one of ours may be living with us longterm (because of health problems) so we have a clause in our will that the sale of the property can be delayed by nine months to give everyone time to grieve but also sort out new accommodation without penalising other beneficiaries.

    I think it's unfair to allow one child to take up life-long residence.
  • edited 13 May 2019 at 2:14PM
    SeniorSamSeniorSam Forumite
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    edited 13 May 2019 at 2:14PM
    getmore4less ....................You missed the question.

    Gifting half property to CHILDREN with spouse having a life interest, if half house above nil rate band, would that trigger tax payments?
    I'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, so my comments are just meant to be helpful.
  • getmore4lessgetmore4less Forumite
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    SeniorSam wrote: »
    getmore4less ....................You missed the question.

    Gifting half property to CHILDREN with spouse having a life interest, if half house above nil rate band, would that trigger tax payments?

    No I did not miss the question, you did not understand the answer.


    NO TAX bcause it ALL gets spouse exemption going into the trust due to the life interest being the spouse.

    Who the eventul beneficiaries of the trust is not relevant at this point.
  • edited 13 May 2019 at 5:03PM
    SeniorSamSeniorSam Forumite
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    edited 13 May 2019 at 5:03PM
    Thank you. I thought that gifting the property to the children, rather than the spouse but with the Lifetime interest for the spouse may attract excess inheritance tax. That's really good news then.

    So with a high end property of say £1,500,000, the first to die could gift their half (£750,000) into Trust and not worry about any excess inheritance tax. I appreciate you confirming that
    I'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, so my comments are just meant to be helpful.
  • getmore4lessgetmore4less Forumite
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    SeniorSam wrote: »
    Thank you. I thought that gifting the property to the children, rather than the spouse but with the Lifetime interest for the spouse may attract excess inheritance tax. That's really good news then.

    So with a high end property of say £1,500,000, the first to die could gift their half (£750,000) into Trust and not worry about any excess inheritance tax. I appreciate you confirming that

    On first death,

    The IHT gremlins kick in on second death as the value in the trust falls on the spouse estate when they die if they don't take steps to mitigate IHT.

    The residential nil rate band throws a few curveball should the children die before they inherit as remainderman.
  • SeniorSamSeniorSam Forumite
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    IHT kicks in on second death but are you saying that the nil rate bands of both still applies?

    In which case, should caution be applied to limit the value of that part of the house gifted in Trust to the children on first death to keep within the nil rate band and to avoid exceeding the allowance of both on second death?
    I'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, so my comments are just meant to be helpful.
  • Tom99Tom99 Forumite
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    SeniorSam wrote: »
    IHT kicks in on second death but are you saying that the nil rate bands of both still applies?
    In which case, should caution be applied to limit the value of that part of the house gifted in Trust to the children on first death to keep within the nil rate band and to avoid exceeding the allowance of both on second death?
    I can't see how that would help since you may be bring forward the IHT bill by increasing the IHT bill on the 1st death and will reduce the nil rate band passing to the survivor. Better to pass everything to the surviving spouse and for the survivor to make PETs and hope to last 7yrs.
  • SeniorSamSeniorSam Forumite
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    Tom99, It really depends on the gamble that long term ca=re will not be needed for the second to die, as all of the estate (bar PET's) could be needed to meet that cost and possibly nothing left for the family.
    I'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, so my comments are just meant to be helpful.
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