Capital gains/inheritance tax/Will

Mojisola

outlaw777 said:

With regards to the family home, my parent plans to leave it to me and my sibling.

It's not wise to specify a property in a will because the testator might not own the place by the time of their death.

outlaw777

Thanks for all the responses please could someone on here sum up my best go to option then?

sheramber

Discuss it with a solicitor 

Idiot_Savant

How would your parent pay for care, should it be needed in the future, if the house were to be in your name?

Keep_pedalling

outlaw777 said:

Thanks for all the responses please could someone on here sum up my best go to option then?

Your parents best option is to talk though their options in making a suitable will with a local solicitor. They should so seriously think about making lasting powers of attorney to cover the possibility that an accident or illness causes either of them to loose mental capacity.

outlaw777

Someone has informed me my parents can put the house in our name via a trust to avoid the taxman getting 40% does anyone know anything about this?

Keep_pedalling

outlaw777 said:

Someone has informed me my parents can put the house in our name via a trust to avoid the taxman getting 40% does anyone know anything about this?

Was this someone down the pub? Very dumb idea and no it won’t save IHT unless your parents are also happy to pay full market rent to the trust which would avoid the gift with reservation issue.

if your parents have more than £1M in assets then they should take some paid for inheritance planning advice, if not their NRB allowances should mean there is no IHT to pay.

Jeremy535897

The "paying market rent" option suffers from a number of disadvantages:

• it creates taxable income out of nothing in the hands of the recipient of the rent
• rent reviews are often overlooked, resulting in a payment of less than market rent, so putting the house back in parents' estate
• it wastes the RNRB that can be worth up to £350,000 free of IHT
• it loses the capital gains tax exemption for main residences
• the gift to the trust may be ignored for assessing capital if the parents need council funded accommodation in future

For situations where an adult child lives in the same house as the parents, the parents can give an appropriate share of the house to the child and:

• no rent needs to be paid
• no capital gains tax main residence is lost
• the RNRB may be available for the balance of the property owned by the parents
• but there may still be an issue over council funded accommodation