Difficulties agreeing on early inheritance routes from father who wishes to downsize

surfer91919

Hi all,

I was really not sure where to put this thread- mods feel free to move it if you think there's a better place for it?

Firstly I appreciate this is a very first world problem.

Here's the situation:

My father is now 75 and lives on an extensive small holding which he owns outright which was once the family home, with many outbuildings, long boundaries and has expressed that he wants to downsize and is open to transferring some of the wealth in the property to his children as early inheritance.
The property has been rics valued to be on the brink of the IHT threshold currently, clearly if there isn't a significant drop in the monetary value of the property it will be taxed for IHT seeing as the threshold will not move until atleast 2028.
A general agreement was obtained that some kind of equal transfer should happen from my father, to this three children, which could benefit everyone in some way and result in better management of the property.

The proposal was very mild with the lions share retained by my father. I know of several people who actually gave their entire primary residence to their children when they got into their 60s or 70s and then continued to live there paying "rent".

What I suggested and indeed investigated (by obtaining a breakdown rics valuation of all the possible subdivisions of the property and gaining advice from solicitors and accountants) was a proposal to transfer three equally valued chunks of land over. This was met with encouraging noises until the last week or so.

As I half expected, it has ground to a halt and as such it's likely we'll lose the benefit of the currently more generous tax free allowances which will start reducing in the new financial year.

The issue arising is that of what is perceived as being unfair levels of betterment as a result of these gifts.
Neither of my siblings are in a position to build a house on any of these plots, but I am partly because I've scrimped and saved for years and tried to grow my previous inheritance, not had a family etc, however I am now going on 35 and would like to get moving to create an environment where planning a family would be possible. As such me and my partner would look to build/ self build a home on one of the equally valued gifted plots.
I thought it would create the ability for some of us to live as neighbours, maybe grow some food collectively etc, and provide more security against housing costs whilst also financially planning more effectively ref IHT than letting the place become derelict (it's half derelict in places already) and taking our chances.

The betterment from obtaining this small plot of land which comprises a small fraction of the property (around 7%) and building a home to live in/ plan for a family appears to be unacceptable as the other two siblings don't have the means/ opportunity to also do this which it has to be accepted is partly down to their previous life choices as well as luck.

I have made the point that if the whole place is liquidated and sold off which is something now being talked about by my father and siblings (my father had previously expressed a desire to stay living there but downsize the grounds/ surrounding buildings and just keep the main house) then the same would apply to any monies gifted to us. If for example any of us made use of an opportunity, invested our gift (whether it land or money) in something which then substantially increased its value, the same question of unfair betterment would rise if every sibling was not given the same opportunity.

Frankly I don't see the difference between one sibling building a home on a bit of land, if their means allow (which is their business) and another sibling getting money and/ or lands to equivalent to equal RICS value and using it in other investments to increase its value. I can't see where a line could be drawn in terms of what is considered to be acceptable betterment and some arrangement whereby there are continual redistributions of money to keep things equal is not sustainable and not exactly a gift without favour.

What is right and fair here? How have other people navigated this situation (a very first world situation admittedly).

Any thoughts much appreciated

Scorpio33

I think you are confusing the inheretance issue as the property and land still belongs to your dad (currently). If it transfers to you now or after he dies, it will still be taxed at inheretance tax rates if he dies within 7 years as well (unless its held in a trust).


If the place is to be sold off, surely it is better to sell it to you at market rates, be it now or later, then at least some of the land stays within the family? You are not gaining anything above anyone else, as long as you pay market rates (or at least agree that value will be taken off your final inheretance)?

Mojisola

surfer91919 said:

What I suggested and indeed investigated (by obtaining a breakdown rics valuation of all the possible subdivisions of the property and gaining advice from solicitors and accountants) was a proposal to transfer three equally valued chunks of land over. This was met with encouraging noises until the last week or so.

The issue arising is that of what is perceived as being unfair levels of betterment as a result of these gifts.
Neither of my siblings are in a position to build a house on any of these plots, but I am

I thought it would create the ability for us to live as neighbours, maybe grow some food collectively etc,

Is that at all realistic - would you get planning permission for any more houses to be built on the land?

Why do you expect your siblings to have the same aspirations about living that kind of life?

Keep_pedalling

Why make it so complicated, if he wants to downsize and gift some of his assets the simplest option is to sell up and make cash gifts. The decision is entirely his so what ever it is those who want something else will just have to lump it.

theoretica

That is a good question about whether you are confident you would get planning permission for houses on the land - no point in a castle in the sky causing family upset if it would be turned down.

I can see that emotionally one sibling having a house on the family property when the others don't is a rather different feeling result from one sibling buying a house without such emotional attachments.

pickledonionspaceraider

I sense some bad sibling blood here.  The general undercurrent in the OP is 'I have made better life choices than my siblings'...and can read as a rather superior tone

We aren't in control of everything in life - much of what happens to us is luck, health and opportunities.  

Try not to let these superior toned thoughts spill out in to every day life, as this could be a reason why siblings are feeling they want to put the brakes on this - ie if anything - just to stop you growing your wealth - i e resentment and push back against superiority.  The community living will never work well because you aren't all equal - and I am not talking financially

You and your siblings do not need to agree - this is a matter for your father to choose- it is not a choice if yours or your siblings.

I suggest you back off a bit.  I feel sorry for elderly people whose children start pawning over the pickings whilst they are still alive.

Sadly envy and jealously between siblings never seems to cease, sadly

Mands

What I suggested and indeed investigated (by obtaining a breakdown rics valuation of all the possible subdivisions of the property and gaining advice from solicitors and accountants) was a proposal to transfer three equally valued chunks of land over. This was met with encouraging noises until the last week or so.

Playing devil's advocate here, what you suggested and investigated and proposed is a scheme that benefits you and not your siblings.

You get land and have the resources to build on it, planning permission permitting. They get land but do not have the resources to develop and, one assumes, are unable to sell.

Yes, their inability to develop is down to different life choices to you. But your scheme gives you all the benefits with the added irritation of you having a stick with which to beat them ... 'if only you'd managed your lives better you too could be in the position I'm in'. Are you really surprised they aren't enthusiastic?

If your father is mid-70s and a fair-minded man who loves all his children he's probably worn out by all the discussion and angst and the realisation he can't make everyone happy no matter how hard he tries. Selling everything and handing over cash instead perhaps seems like the easiest solution.

FWIW I like your plan. Retaining the family home and memories, extended family living, collective food growing all sounds wonderful. But for that to happen you would *all* need to want that and to be able to bring it to fruition. And that isn't the case.

Mands

MobileSaver

surfer91919 said:

a proposal to transfer three equally valued chunks of land over. ... The issue arising is that of what is perceived as being unfair levels of betterment as a result of these gifts.

I'm not entirely clear on what the issue is; are your siblings complaining that the chunk of land possibly going to you is better than the chunk of land going to them (even if ostensibly they are all of the same value)?

Marmaduke123

It sounds as if the siblings don't want land as it is of no use or benefit to them. I think your plan is pretty selfish, as you are trying to impose your wishes on them. Have you looked into planning permission for your proposed house, and for the other two plots of land?

MobileSaver

Marmaduke123 said:

It sounds as if the siblings don't want land as it is of no use or benefit to them. I think your plan is pretty selfish, as you are trying to impose your wishes on them.

In which case the siblings can sell the land and presumably cash will be of benefit to them? How is it selfish if all siblings receive something of the same value?

Mojisola

MobileSaver said:

Marmaduke123 said:

It sounds as if the siblings don't want land as it is of no use or benefit to them. I think your plan is pretty selfish, as you are trying to impose your wishes on them.

In which case the siblings can sell the land and presumably cash will be of benefit to them? How is it selfish if all siblings receive something of the same value?

Unless it's certain that planning permission can be gained for all three properties, the plots aren't going to be worth much and could just be a nuisance to own.