LISA and inheriting a share in property

getmore4less

What do you want to happen to the house when the time comes that mum is no longer able to live there?

As your parents are divorced there are issues with the IIP trust approach as there is no transferable nil rate band(s)

what was the financial settlement at divorce time,  that may impact the beneficial interests orthere may already be a life interests set up.

From what you have said the fathers share is to go to you and step sibling, doing nothing  you have mum 50% and you two 25% each.

Back to he question what do you want to happen in the future.
one option, if you plan to live there  is to buy out the step sibling.

macman

noclaf said:

Rather than start a new thread thought I'd post another question here on inheritance tax.
I believe (but need to confirm) that my father's total estate will be within the threshold (325k or is it 500k now?).
My parents house mortgage is "paid" but there is a small balance remaining circa £100 I believe. Does this have a bearing on inheritance tax?

The mortgage balance will be a debt owed by the estate. IHT is calculated on the value of the estate after all debts are cleared, less the available allowances. 
It's no different to any other debt of the state.

noclaf

Macman - thanks makes sense
Getmore4less - some additional context. My half sibling and I did not grow up together, only my mother and I have lived in the house (still do) so based on my father's will his half of the property is to be passed to myself only and rest of the estate (financial assets/cash) is to be divided equally between my half sibling and I. 
My mother is not mentioned in his will.

getmore4less

Back to the question what do you want to happen to the house in the future once mum is no longer able to live there? 

Your age may also be relevant if chargeable care is required have you looked that far ahead yet?.

Also seems unusual for the financial settlement at divorce to have your father keep his beneficial interest

One of the reasons interest in possession trust are used is it avoids CGT liability for the remaindermen.
As you will be living in your share of the house you qualify for the CGT relief. 

your father will have £500k nil rate band to use(less any used up previously by gifts etc)

noclaf

getmore4less said:

Back to the question what do you want to happen to the house in the future once mum is no longer able to live there? 

Your age may also be relevant if chargeable care is required have you looked that far ahead yet?.

Also seems unusual for the financial settlement at divorce to have your father keep his beneficial interest

One of the reasons interest in possession trust are used is it avoids CGT liability for the remaindermen.
As you will be living in your share of the house you qualify for the CGT relief. 

your father will have £500k nil rate band to use(less any used up previously by gifts etc)

As my mother's condition is progressive, I am of the view the house may need to be sold to fund her care needs later. As she owns a share of the house then was thinking 50% of the proceeds could be used towards funding care along with her pensions and other benefits etc. Does this seem like a reasonable/practically sound suggestion? My ideal option would be to 'buy out' mum's half and avoid selling the house but I doubt a lender will agree to mortgaging 'half' a house based on my previous threads posted on this topic.
I assume that when the divorce happened it likely wasn't planned out thinking about future CGT implications and other aspects. A lot of it was left in limbo as I have been finding out sifting through it all.
There were no gifts from my father in more than 20-25 years I'd say and any prior to that period were v small amounts.

xylophone

Perhaps all in all it would be best to regard the LISA as part of your savings for retirement?
You might switch it to stocks and shares (if not already in stocks and shares).

Once your father's will has been probated, you will be recorded as joint proprietor with your mother- presumably there is a Form A restriction already in place .

As for your mother going into care, as she  would be the  beneficial owner of  only half the property, and as  you (as beneficial owner of the other half)   would be actually occupying the property,  it may well be that the LA (if you are looking at means tested care) would either  disregard it or register a charge against the property for repayment of care costs  at some point in the future. 

Another option could be for you to take out a mortgage to buy your mother out at the time she went into permanent residential care.

getmore4less

if the long term preverance is to keep the house to live in.
Can you not buy the house off the estate as a FTB at 50% LTV(your inheritance)
What is the problem with getting a mortgage?
it is no longer 1/2 a house as you will own 100% if you buy out mum, if she has capacity now  or using  POA(may need court approval) if she does not have capacity.

Have a read of examples (age UK link there are others) of when  local authorities should take into account  disregard.
https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs38_property_and_paying_for_residential_care_fcs.pdf

noclaf

Xylophone - re the LISA exactly my thinking, there is 15k there but its with Skipton at present so maybe I will transfer to a S&S LISA with HL for example and that would complement my pension(s) and S&S ISA.
getmore4less - I will look into that, I am a deputy for my mother (via CoP) as she does not have capacity (was deemed to not have capacity by doctor due to Dementia diagnosis), I currently manage her home care fees using her pensions and AA (LA arranged carers come daily)