Inheritance Tax & Property

Lee_MSE

Help please!
am helping mum with her will... she's a divorcee lives alone property value is  £600k no savings - am i to assume IHT threshold will be £500k 
£175k (personal) + £325k (as leaving house to 5 children equally) ? so IH tax would be liable on the remaining £100k at 40% ?

also can someone tell me how post this a house legally / practically gets split 5 ways can you have 5 separate names on the deeds or does one of the siblings have to sell the house to realise the money ? all help appreciated..

Keep_pedalling

Lee_MSE said:

Help please!
am helping mum with her will... she's a divorcee lives alone property value is  £600k no savings - am i to assume IHT threshold will be £500k 
£175k (personal) + £325k (as leaving house to 5 children equally) ? so IH tax would be liable on the remaining £100k at 40% ?

also can someone tell me how post this a house legally / practically gets split 5 ways can you have 5 separate names on the deeds or does one of the siblings have to sell the house to realise the money ? all help appreciated..

In that situation you are going to have an IHT bill of £40k. The sensible way is sell the house pay the tax and distribute the rest. It would not be very sensible to hold onto a house with 5 owners as that way lays trouble if one ore more sibling want to sell and the others don’t. There is no need to mention the house in the will as she may not even own it in many years time when she dies.

I would be more concerned that my mother is asset rich and cash poor as it can be difficult to maintain a house in good condition if you have no savings to pay for repairs. She should seriously consider downsizing.

Brie

Keep_pedalling said:

There is no need to mention the house in the will as she may not even own it in many years time when she dies.

I would be more concerned that my mother is asset rich and cash poor as it can be difficult to maintain a house in good condition if you have no savings to pay for repairs. She should seriously consider downsizing.

I completely get this about downsizing except that if she needs care in her home she can get that if she has no savings.  And she can't be made to sell the house even if it's a crumbling mansion. 

But if she downsizes she then has money that she would need to pay for her care.  Of course if there's a need to go into a "nursing home" the house would then need to be sold.

RAS

Brie said:

And she can't be made to sell the house even if it's a crumbling mansion. 
.

Are you SURE that's correct? Does anyone over aged 60 or disabled live with her

Malthusian

Brie said:

Keep_pedalling said:

There is no need to mention the house in the will as she may not even own it in many years time when she dies.

I would be more concerned that my mother is asset rich and cash poor as it can be difficult to maintain a house in good condition if you have no savings to pay for repairs. She should seriously consider downsizing.

I completely get this about downsizing except that if she needs care in her home she can get that if she has no savings.  And she can't be made to sell the house even if it's a crumbling mansion. 

But if she downsizes she then has money that she would need to pay for her care.  Of course if there's a need to go into a "nursing home" the house would then need to be sold.

If she hangs on to her crumbling £600k house just to make the State pay for the occasional visit from an agency worker, then the State will present her with a bill for her care of £40k regardless of whether she got £40k worth of care or not. (Ignoring inflation.)

If she downsizes and spends her own money on care of her choice, she will get 40% tax relief on every penny until she has spent £100k (which would be an unusally large amount although far from impossible).

Between the options of living in a crumbling mansion with the occasional 5 minute visit from a local authority worker, or downsizing and being able to pay for the finest care my own money can buy (with 40% tax relief), I know which I'd be going for.

What are the odds the local authority will decide her needs are too great for domiciliary care when they have a financial interest in that outcome?

RAS said:

Brie said:

And she can't be made to sell the house even if it's a crumbling mansion. 
.

Are you SURE that's correct? Does anyone over aged 60 or disabled live with her

If she only needs care in her home that is correct. Whether anyone else over aged 60 or disabled also lives there doesn't matter, because she does.

The rule about relatives aged over 60 or disabled living in the property (+ partners, single parent exes and children under 18) only kicks in when someone has to move home to receive the care they need.

Mojisola

Lee_MSE said:

am helping mum with her will.
also can someone tell me how post this a house legally / practically gets split 5 ways can you have 5 separate names on the deeds or does one of the siblings have to sell the house to realise the money ? all help appreciated..

You're not writing the will yourselves, are you?
With five beneficiaries, it would be best if the will instructs the executors to sell the property and distribute money between them. 

Dymphna60

Re downsizing.  

Can you not persuade your mum that if she releases say £250, 000 from her now home that she will be able to live comfortably and still buy a big amount of home care should she ever need it ? 

Is she wanting to preserve the £600, 000 house to maximise the amount she leaves as an inheritance to her children? Will that really be the case if the house deteriorated considerably. 

I know parents sometimes need a pretty big but loving push to believe that you are all big boys and girls now and can look after your financial affairs. 

Mojisola

Dymphna60 said:

Re downsizing. 

Can you not persuade your mum that if she releases say £250, 000 from her now home that she will be able to live comfortably and still buy a big amount of home care should she ever need it ? 

Is she wanting to preserve the £600, 000 house to maximise the amount she leaves as an inheritance to her children? Will that really be the case if the house deteriorated considerably.

And she can spend at least 40k on herself instead of her estate paying inheritance tax without the beneficiaries being any worse off.

Keep_pedalling

Brie said:

Keep_pedalling said:

There is no need to mention the house in the will as she may not even own it in many years time when she dies.

I would be more concerned that my mother is asset rich and cash poor as it can be difficult to maintain a house in good condition if you have no savings to pay for repairs. She should seriously consider downsizing.

I completely get this about downsizing except that if she needs care in her home she can get that if she has no savings.  And she can't be made to sell the house even if it's a crumbling mansion. 

But if she downsizes she then has money that she would need to pay for her care.  Of course if there's a need to go into a "nursing home" the house would then need to be sold.

That is completely wrong, but anyway I am sure the OP would want their mother to be able to choose where and who provides care  if needed, rather than take a risk with an underfunded LA providing it.

Lee_MSE

Keep_pedalling said:

Lee_MSE said:

Help please!
am helping mum with her will... she's a divorcee lives alone property value is  £600k no savings - am i to assume IHT threshold will be £500k 
£175k (personal) + £325k (as leaving house to 5 children equally) ? so IH tax would be liable on the remaining £100k at 40% ?

also can someone tell me how post this a house legally / practically gets split 5 ways can you have 5 separate names on the deeds or does one of the siblings have to sell the house to realise the money ? all help appreciated..

In that situation you are going to have an IHT bill of £40k. The sensible way is sell the house pay the tax and distribute the rest. It would not be very sensible to hold onto a house with 5 owners as that way lays trouble if one ore more sibling want to sell and the others don’t. There is no need to mention the house in the will as she may not even own it in many years time when she dies.

I would be more concerned that my mother is asset rich and cash poor as it can be difficult to maintain a house in good condition if you have no savings to pay for repairs. She should seriously consider downsizing.

thanks for the advice, i shouldve added she has income - to pay bills live etc - just no savings in terms of a will..

Lee_MSE

Mojisola said:

Lee_MSE said:

am helping mum with her will.
also can someone tell me how post this a house legally / practically gets split 5 ways can you have 5 separate names on the deeds or does one of the siblings have to sell the house to realise the money ? all help appreciated..

You're not writing the will yourselves, are you?
With five beneficiaries, it would be best if the will instructs the executors to sell the property and distribute money between them. 

Hi thanks for the advice, no thankfully im not writing the will but i am both a beneficiary and the executor. 
in a practical sense, any idea what the process is to sell a house as an executor?