Mother Passed Away. Father wants to share House

Tom99

Linton wrote: »

Yes the will can be changed by Deed of Variation if all beneficiaries adversely affected by the change agree. This route is often used to pass property directly to grandchildren to avoid IHT problems for the children.

However if you do that he will not inherit his wife's NRB and RNRB whereas if he makes the gift rather than doing it via a DOV he will still have the full £1m allowance next April.
Also any DOV giving more that £475k to the children or grandchildren would be subject to IHT now on the wife's estate.

Mojisola

Babycakes wrote: »

The house is the only asset and is worth £900k.

Babycakes wrote: »

He has three grandchildren. So he would have 1/4 share,so about £220k

Tom99 wrote: »

Also any DOV giving more that £475k to the children or grandchildren would be subject to IHT now on the wife's estate.

Which the current plan would trigger.

So many ways for this to go wrong.

getmore4less

If only 2 of the grandkids live in the house there will be gift with reservation issues and potential preowned asset issues if they move out.

There is the DOV option of a life interest trust for the grandfather with the grandkids as remaindermen.

Retains the transferable nil rate bands.

One issue is this place could be more than £1m by the time the GF dies.

There may be ways to mitigate by passing part on life interest and part absolutely which can be gifted to those grandkids living there.

Babycakes

Would the gift with reservation apply if the grandfather Kees a share whilst giving the others living in the house and contributing to the upkeep their share?

getmore4less wrote: »

If only 2 of the grandkids live in the house there will be gift with reservation issues and potential preowned asset issues if they move out.

There is the DOV option of a life interest trust for the grandfather with the grandkids as remaindermen.

Retains the transferable nil rate bands.

One issue is this place could be more than £1m by the time the GF dies.

There may be ways to mitigate by passing part on life interest and part absolutely which can be gifted to those grandkids living there.

Browntoa

This needs serious legal advice from someone who is an expert in estate planning.

Don't expect it to be cheap to set up and be aware that tax rules are always subject to change

lisyloo

Babycakes wrote: »

He has three grandchildren. So he would have 1/4 share,so about £220k

My MIL fees are £925 which is cheap for the bristol/bath area.
London and SE rates can be higher.


The problem is that some people (exceptions) can live a very long time in nursing home e.g. 10-15 years.
The average is around 26-30 months.


Thats very hard to plan for.

getmore4less

GF needs legal advice and full analysis of the scenarios the check all the various potential tax implications.

If you want research more before then you have a steep learning curve.

The advantage of life interest route is it give GF security retains transferable nil rate bands and ring fences from care fees(as long as he is currently OK to not hit deprivation issues )
It also remove the 7Y PET issue you get with GF gifts

The life tenants could include the daughter as that seems to be one objective, protect the house for her, that may have tax implications at the GF death.