Inheritance of family home

getmore4less

You give the sister the right to live in the house. 

That gives your beneficial interest to her for the duration she exercises that right.

When sold it is as it was hers and will get her residence relief for CGT. 

Common for spouses where they give the right to live in the house to the surviving spouse but ring fence the share for the kids.

Google IPDI trust

You do this with a DOV to make the CGT tax benefits work.

You ciuls gift outright now and there would be no CGT issue.

The other advantage of the DOV route it gives security to sis should you die whoever you give your eventual share can't kick her out.

You could also include your future beneficiaries in the change if you would never need the asset. 

There are other issues around IHT, with a house of this value, for both you and sis estates that would need working through.

Professional help would be advised. 

Sea_Shell

All these DoV and trusts aside...

Fundamentally, are you happy that you may never get to realise your inheritance as cash?    Even if you (or your family) desperately need it, unless your Sister also agrees to also sell, or has the means to buy you out.     

Your kids could also end up inheriting this "problem", as we have read about in other threads.

Does your Sister also have children?   Is she leaving her share to her children?    

Couldn't this get very messy in the future if the house ends up being owned jointly by a number of children (cousins).

You need to (both) think VERY hard about all the what-ifs here, and also how this could all play out depending on what order you may die, who might get divorced, sick or it goes on for long enough that care is needed.

What is the 5-10-15-20+ year plan?

You mentioned she's being paying the utilities, but what's the plan for the big stuff that might come up?    Are you going to pay (or be able to pay) your half towards, say, a new boiler, roof repairs or other major works that may crop up?

Is your sister in a financial position to run a family home on her own (or with a partner/husband)?    

Suzie123

Sea_Shell said:

All these DoV and trusts aside...

Fundamentally, are you happy that you may never get to realise your inheritance as cash?    Even if you (or your family) desperately need it, unless your Sister also agrees to also sell, or has the means to buy you out.     

Your kids could also end up inheriting this "problem", as we have read about in other threads.

Does your Sister also have children?   Is she leaving her share to her children?    

Couldn't this get very messy in the future if the house ends up being owned jointly by a number of children (cousins).

You need to (both) think VERY hard about all the what-ifs here, and also how this could all play out depending on what order you may die, who might get divorced, sick or it goes on for long enough that care is needed.

What is the 5-10-15-20+ year plan?

You mentioned she's being paying the utilities, but what's the plan for the big stuff that might come up?    Are you going to pay (or be able to pay) your half towards, say, a new boiler, roof repairs or other major works that may crop up?

Is your sister in a financial position to run a family home on her own (or with a partner/husband)?    

Thank you, all things we are considering.  In this scenario, would your advice be to sell now to avoid future problems?

Sea_Shell

Suzie123 said:

Sea_Shell said:

All these DoV and trusts aside...

Fundamentally, are you happy that you may never get to realise your inheritance as cash?    Even if you (or your family) desperately need it, unless your Sister also agrees to also sell, or has the means to buy you out.     

Your kids could also end up inheriting this "problem", as we have read about in other threads.

Does your Sister also have children?   Is she leaving her share to her children?    

Couldn't this get very messy in the future if the house ends up being owned jointly by a number of children (cousins).

You need to (both) think VERY hard about all the what-ifs here, and also how this could all play out depending on what order you may die, who might get divorced, sick or it goes on for long enough that care is needed.

What is the 5-10-15-20+ year plan?

You mentioned she's being paying the utilities, but what's the plan for the big stuff that might come up?    Are you going to pay (or be able to pay) your half towards, say, a new boiler, roof repairs or other major works that may crop up?

Is your sister in a financial position to run a family home on her own (or with a partner/husband)?    

Thank you, all things we are considering.  In this scenario, would your advice be to sell now to avoid future problems?

Personally, yes!!!

It's cut and dried then.   You both get your cash inheritance to do with what you each want, with no strings, no ties and no obligations to each other.   You can then help your children as and when you want.   Invest it in whatever you want, be that a pension, ISA, another property etc etc.   Your sister can do likewise.

It just makes everything simple....and I like simple.

TBagpuss

Yes, it's much simpler, and your sister would be able to use her share to buy somewhere to live . You could agree a brief grace period for her stay in the house before marketing it if you wanted, if this is her only home. (if she has her own properyty as well then that isn't as necessary) .

Suzie123

My sister has lived in the house all her life and doesn’t want to move. I also don’t want her to have to move.

We’re going to get some advice but we’ve been wondering... is it possible for me to sell my share to her today at market value, for consideration payable in the future ie when the house is sold or she moves out?  Can a restriction be put on the title saying that the first £x of sale proceeds are mine?  That way, she can stay there, maintain, renovate etc and benefit from any increase in the value.

I don’t need the cash now so my immediate wish is to ensure that she doesn’t lose her home.

Savvy_Sue

Yes you can  but you each need to take advice, and there are some pitfalls. Should you ever need means tested benefits, for example, or if you divorce, this willl be included in your assets.

Sea_Shell

At the end of the day, only you and your sister can decide how you want to proceed.

Just make sure you move forward with your eyes wide open, seek professional advice and be aware of all the "what ifs" that may befall you in the future.

Sea_Shell

Any updates OP?

TBagpuss

Suzie123 said:

My sister has lived in the house all her life and doesn’t want to move. I also don’t want her to have to move.

We’re going to get some advice but we’ve been wondering... is it possible for me to sell my share to her today at market value, for consideration payable in the future ie when the house is sold or she moves out?  Can a restriction be put on the title saying that the first £x of sale proceeds are mine?  That way, she can stay there, maintain, renovate etc and benefit from any increase in the value.

I don’t need the cash now so my immediate wish is to ensure that she doesn’t lose her home.

Yes - the house could be transferred to her with you having a charge registered against it, entitling you to either a fixed % of the value, or a lump sum plus interest - effectively a private mortgage. 

It would also be possible for it o be held in joint names with a declaration of trust.

Either way you would need a formal agreement in place which covered things like who was responsible for what in terms of maintenance and upkeep, when either of you could force a sale. If she was planning to carry out renovations or improvements you'd also need to provide  for how those would be treated - it's important to bear in mind that any increase in the property value, and the amounts spent on the work, are two very different things, so *normally* you would have an agreement which adjusted your % interests to take account of the impact in value her renovations had, rather than the amount she spent on them (e.g. but getting a surveyor to value before and after,  You'd also need to get separate advice - you would have potential CGT liability, for instance, and you would need to think about how it may affect your relationship - for example, if in a few years you need to access your capital from the property and she can't at that time afford to raise the funds to pay you out, so the house does need to be sold.