Ex Wife - No Will but sharing low value Estate with children

Oshbarg

Hi All,

My ex.wife passed away last year without leaving a will. She wanted to leave her estate in equal shares to her widow/husband and our 2 boys (Currently aged 18 and 14).

The estate value is £135k and the house is worth approx £115k.

Her husband although not legally required to share the estate has agreed to share it equally. He is not in a great financial position and therefore I have agreed to purchase the house for the value of his share using a Buy To Let mortgage - Interest Only (£35k). I will then renovate the house and sell it with the proceeds paying off the mortgage, renovation costs and the value left being split equally between my two boys (expected to be approx £35k each).

However as there is no will how do I go about tax efficiently gifting the proceeds of the property to the boys so they are not penalised?

My older son is currently in an apprenticeship earning £9k per year, therefore with a gift of £35k he would be seeing significant taxation.

Can anyone give me any advice on how I can provide the money they were entitled to (albeit not listed in a will) without any significant taxation?

Thanks in advance!

Sea_Shell

Is her husband claiming any benefits, or likely to need to in the future?

He could be seen to have deliberately deprived himself if he gives away any of his inheritance.

He needs his own legal advice, which I'm sure you'll encourage him to get.

xylophone

A deed of variation can also be used to alter the rules of intestacy, when a person has died without making a Will. If a beneficiary of an estate wishes to alter the interest he has received, he can do so by entering into a deed of variation within 2 years of the deceased's death. The variation is treated as being made by the deceased and is effective from the deceased’s death rather than being made by the beneficiary thereby allowing him to redirect all or part of his interest to another party.

Your wife owned the property in her sole name?


The widower is happy to move out and buy a place of his own?

Could the will not be varied to direct that the house be sold and half the proceeds go to the boys together with half the value of any other assets?

Sea_Shell

xylophone wrote: »

A deed of variation can also be used to alter the rules of intestacy, when a person has died without making a Will. If a beneficiary of an estate wishes to alter the interest he has received, he can do so by entering into a deed of variation within 2 years of the deceased's death. The variation is treated as being made by the deceased and is effective from the deceased’s death rather than being made by the beneficiary thereby allowing him to redirect all or part of his interest to another party.

Your wife owned the property in her sole name?


The widower is happy to move out and buy a place of his own?

Could the will not be varied to direct that the house be sold and half the proceeds go to the boys together with half the value of any other assets?

Does a Deed of Variation not count as deprivation though, as you've effectively given away £££ that you were otherwise entitled to?

Oshbarg

He has been granted a Letter of Administration, so would he need the deed of variation on top of this?

Due to his current financial position and the impact of her death on him, it is likely that he would be looking to claim benefit at sometime in future.

The property was solely owned by my ex.wife and only her name was listed on Land Registry however there was a joint mortgage held on the property I believe.

The boys lived with him for approximately 7 years and he knew his wifes wishes to share the estate equally, so he has been extremely gracious to agree. He also feels there are to many memories in the property and he wants to move on with his life so wants to make a new start in another property. (He is only in his mid thirties).

There is no Will so legally the boys are not entitled to anything until the estate value exceeds £250k and then they would be entitled to half of anything above this value I believe.

Dox

He is indeed behaving with grace and decency at a time which must be truly horrible for him as well her (and your) boys.

Might be useful to have a word with an organisation which specialises in benefits such as http://www.turn2us.org.uk

xylophone

Does a Deed of Variation not count as deprivation though, as you've effectively given away £££ that you were otherwise entitled to?

For somebody already on means tested benefits this could be the case.

In these particular circumstances, where he is not currently on MTB, nor depriving himself deliberately in order to claim MTB and where he is seeking to make due provision for the children of the deceased (one a minor), it seems to me unlikely that a case could be made for deliberate deprivation.

It also occurs to me that were the widower being less generous, the OP could legitimately bring a case on behalf of his children that due provision was not made for them from their mother's estate?

Clearly the widower should take advice from a solicitor - the OP might like to help with the fee as his children would benefit.

Keep_pedalling

Why do you think this would cost your eldest in tax? It is not income and is not taxable.

thorsoak

If your ex-wife did not leave a will, then she died intestate, and her estate goes to her next of kin - her sons.

noh

thorsoak wrote: »

If your ex-wife did not leave a will, then she died intestate, and her estate goes to her next of kin - her sons.

No.
She was married therefore any estate up to the value of £250k goes to her husband.
https://www.gov.uk/inherits-someone-dies-without-will

unholyangel

Oshbarg wrote: »

Hi All,

My ex.wife passed away last year without leaving a will. She wanted to leave her estate in equal shares to her widow/husband and our 2 boys (Currently aged 18 and 14).

The estate value is £135k and the house is worth approx £115k.

Her husband although not legally required to share the estate has agreed to share it equally. He is not in a great financial position and therefore I have agreed to purchase the house for the value of his share using a Buy To Let mortgage - Interest Only (£35k). I will then renovate the house and sell it with the proceeds paying off the mortgage, renovation costs and the value left being split equally between my two boys (expected to be approx £35k each).

However as there is no will how do I go about tax efficiently gifting the proceeds of the property to the boys so they are not penalised?

My older son is currently in an apprenticeship earning £9k per year, therefore with a gift of £35k he would be seeing significant taxation.

Can anyone give me any advice on how I can provide the money they were entitled to (albeit not listed in a will) without any significant taxation?

Thanks in advance!

This is potentially a minefield of questions.

Firstly, have you assessed liability for capital gains?
Secondly, I can't work out if you mean the boys will inherit a third each and you'll buy the remaining third at 35k, then gift your third to them. Or whether you're talking about you solely acquiring the whole property for 35k to then later gift it to your sons.