No Inheritance Tax if I have M.H. Problems?

nj321

My parents recently went back to their solicitor because I have no financial security of my own and am completely reliant on their Inheritance which is very frightening.  I am in my 40's and have lived with them in this house since I was 7 and never owned a property or have a pension.  I haven't even paid my stamp.  I haven't been working for over 11 years.  As I write this I am worried sick about my future.  My parents told the solicitor, the house is not worth above the I.T threshold.  They said it is worth £550,000.  This is incorrect.  The house is worth about £750,000.  They have cash assets of about £50,000.  The will is also written so that my mom leaves her half to me and my dad leaves his half to her.  I have one sibling.  My parents came home and made it very clear the solicitor has said I am safe and there is no inheritance to pay.  Apparently this is because I have long standing mental health problems, which I can prove and I am considered the third wheel, like the third partner.  I said the reason the solicitor thinks I am protected is because they told her the house is under the I.T. threshold and that officially I will own 3/4 of the house.  So I get to stay there.  I have no intention of withholding my siblings half.

Incidently, how does I.T. work when either passes away.  I take it, there is inheritance tax.  And how long do you have to pay it off.

Please can an solicitor or expert clarify who is right.  I used an I.T. calculator, and it said there will be £150,000 of I.T. which I don't believe.

monkeycat25

If your parents are married then they will get the extra nil rate band which means if leaving a property to their children they have IHT allowance of £1M so a property of £750K should be OK. Not an expert but think that is what teh solictor means

Keep_pedalling

There is no such exemption, but as your parents estate is under £1M the estate is exempt under current rules. What might be exempt is the house being used to pay care costs is either needs to go into residential care as it is still required by a dependant resident.

I would have thought life time interest trusts might be appropriate here to protect your siblings inheritance. Do you have a will in place?

doodling

Hi,

Overall it is likely that there won't be any inheritance tax to pay.

The only question I have is that you state that you "have no intention of withholding my siblings half".  An equal split between you and your sibling would mean that, unless you both wanted to live together, the house would probably be sold and the proceeds split between you, you could then buy somewhere else to live  - is that what you are expecting?

If that isn't what you expect then a life interest trust set up the wills to protect your interest in the house might be appropriate.  Note however that, assuming you are a similar age to your sibling with similar life expectancy, then in reality such a trust is going mean that it will probably be your sibling's children rather than your sibling themselves who actually get any benefit from the value of the house.

What is your sibling's view?

nj321

I don't have a Will in place.  My parents have only just been for a new appt with their Solicitor so I can't ask them again about trusts.  I haven't spoken to my sister.  I intend to share the inheritance.