Inheritance

Chatty_lady2020

We live in my husbands family home and recently my mother-in-law has moved back in. My mother-in-law would like us all to carry on living together in her house (which is fine). As we are not familiar with inheritance tax etc we wondered (as in MIL, Hubby and myself) is there a way she could sign the house over to us or sign a percentage. Obviously, we will seek advice. 

Any advice or info would be helpful. 

Thank you 

p00hsticks

I don't quite follow from your explanation how many houses there are / which house is which - who does the house that you describe as 'your husband's family home' belong to ? Is the house you refer to as 'her house' a different one ? That belongs only to her ?

There are ways of sharing / transferring ownership, but if your MIL is likely to need social / nursing care in future she needs to be wary of giving away funds that would otherwise be funding that care - it could be regarded as 'deprivation of assets' and treated as if she still held it.

Chatty_lady2020

Sorry we live in my husbands family home which is owned by my mother in law. 

68ComebackSpecial

As she will remain living in the property it will be classed as a gift with reservation, so your attempt at tax dodging will fail. 

RAS

What is the value of the house and MIL's likely estate? 

If she was married to your husband's father and inherited from him, and leaves the house to her children, it's quite possible that the limit beyond which her estate would pay IHT is £1m. 

And if she shares/transfers ownership of some or all of the house and keeps the right to live there, it would be a gift with reservation. Which means the value the gift would still be included in her estate for IHT purposes.

She needs to take proper independent tax planning advice.

Keep_pedalling

That would be seen as deliberate deprivation of assets should she ever need care. It would also threaten her long term security in the event in the event that your husband died, divorced or became bankrupt. 

Chatty_lady2020

House is approx £600 k 
she would still have £100 k plus in the bank. 

She wants us all to live together in the family home which sounds great and there is plenty of space. Plus she wants to build a granny flat. 

But I am just unsure of the implications in the future. 

Thanks for the info so far. 

RAS

Unlikely to be any IHT implications if she was married to your husband's father (deceased), but you need to answer that question. If he was, there is no IHT advantage in transferring ownership to your husband.

A granny flat will probably be assessed as being an independent unit for Council Tax purposes, so two lots to pay, and it may have implications re Capital Gains and SDLT taxes down the line.

Huge risks if you and her son divorce, or either of you are made bankrupt, as her son's share of the house would count as an asset of the marriage.

As before, MIL needs to take clear independent advice from a financial adviser who understand IHT, deprivation of assets, and the bankruptcy and divorce implications of her scheme before she does anything. And then make a will and organise POA.

theoretica

You can of course live with her in her house without it being in your name - which might have fewer complications.

Chatty_lady2020

We have lived in the house for over 5 years and she has just recently moved back in. I think she is thinking that when the time comes and she is no longer around that we have a property. 

Mojisola

Chatty_lady2020 said:

I think she is thinking that when the time comes and she is no longer around that we have a property. 

So she could write a will that leaves whatever property she owns to you (best not to specify a particular property in a will in case it's no longer owned by the time of death).