House gifted but death within seven years

74jax

Inheritance tax kicks in at £325k. I'm sure if you pass the house to children it's around £425k


Don't forget, say the estate is £325k then no tax is payable. If it is £326k then tax is only payable on the £1k OVER the limit - not it all.

Keep_pedalling

74jax wrote: »

Inheritance tax kicks in at £325k. I'm sure if you pass the house to children it's around £425k


Don't forget, say the estate is £325k then no tax is payable. If it is £326k then tax is only payable on the £1k OVER the limit - not it all.

If the value of the house and the rest of his estate is Was over £350k then some IHT could be be due, as giving the house away has lost the residential nil rate band. however in this case the estate is well under the nil rate band and no tax will be due.

johnbfan

Thanks for the advice.  We've had to see a Trust solicitor.  Only 50% of the house was included, which complicates things.  Mum died five years before dad set the Trust up and we now have to "find " the documents for other 50% Of the house. Also there are mega questions over what ends the Trust.  Is it when we both die, or the property is sold.  It seems we could advance ourselves the sale proceeds to end it without actually selling,but there are tax liabilities involved. It's not being sold as my brother lives there.  Dad put all these things in place to make life easy when he died but it's just made everything very difficult and expensive. 

Keep_pedalling

johnbfan said:

Thanks for the advice.  We've had to see a Trust solicitor.  Only 50% of the house was included, which complicates things.  Mum died five years before dad set the Trust up and we now have to "find " the documents for other 50% Of the house. Also there are mega questions over what ends the Trust.  Is it when we both die, or the property is sold.  It seems we could advance ourselves the sale proceeds to end it without actually selling,but there are tax liabilities involved. It's not being sold as my brother lives there.  Dad put all these things in place to make life easy when he died but it's just made everything very difficult and expensive. 

Sounds like a life interest trust, with your mother’s share of the house being put into the trust and your father maintaining ownership of his share.

If that is the case the trust ended with his death.

xylophone

 We've had to see a Trust solicitor. 

What advice has he given?

And I am still puzzled as to what exactly has happened here. Can you say what exactly is shown at the Land Registry as to proprietorship? Is there a Form A restriction or any other restriction?

You say that your mother died five years before your father. Did they own the property as joint tenants so that the house automatically fell into your father's sole ownership? Otherwise, were your parents tenants-in- common ? Did your mother leave a will which mentioned such an interest in the property?

If your father was sole proprietor, are you saying that he gifted 50% of the interest into trust  four years ago and retained the other half?

johnbfan

Dad was given no advice. We took him to update his will,  and this is what he decided to do. He had already set up a LPA, funeral plan and DNR, and then this trust. Its not helping that my brother wants to see more solicitors. He believes the one we are seeing is hiding information and just trying to get money out of us. He doesn't trust them.  On what basis he thinks this? The fee. Dad left a bit if savings and my brother says dad didn't leave it for this.  Going to go through the papers at Dad's Friday and see what happened when Mum died. Its do upsetting.  Brother is leaving me to do all this and not being sensible. 

Dox

johnbfan said:

I am hoping that if the house is worth £245,000 and there are two of us then that figure is divided between the two of us, and we will not be liable for Inheritance tax

Inheritance tax is paid by the estate, and in respect of the whole estate, not based on how much each beneficiary receives - but as others have said, it sounds as if the value is below the threshold for IHT. 

xylophone

You have consulted a solicitor. What exactly has he told you?

xylophone

And have you checked the Land Registry? What does it show?
https://www.gov.uk/search-property-information-land-registry

johnbfan

The trust Dad set up only covers 50% of the property.  We have to find papers regarding the other 50%.  I wonder if dad didn't sort things out on mum's half when she died five years previous and the property was still in her name as well when he did the trust.  There isn't much paperwork left to do with mum.  The most recent document shows Dad as the Settlor and myself and brother as the trustees.  Going to see what I can find tomorrow