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

MobileSaver

Mojisola said:

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. 

Agreed but there's still value there even if it's hundreds rather than thousands of pounds.

_Penny_Dreadful

The right and fair thing is for your father to what he wants with his assets whilst he’s still alive. If that’s to sell up and downsize that’s the right and fair thing. 

The only thing I’d suggest that if your father is concerned with his estate being hit with an IHT bill once he has passed is for him to seek professional estate planning advice rather than attempting to DIY it. 

surfer91919

_Penny_Dreadful said:

The right and fair thing is for your father to what he wants with his assets whilst he’s still alive. If that’s to sell up and downsize that’s the right and fair thing. 

The only thing I’d suggest that if your father is concerned with his estate being hit with an IHT bill once he has passed is for him to seek professional estate planning advice rather than attempting to DIY it. 

 Well said. He said he wanted to gift some of it early as it has all been decaying for the last 15 years so I asked everyone for their opinions/ wishes 6 months ago and went from there. He told me to look into it. My question was regarding this idea raised recently that any gain resulting from such a gift should be limited in some way and redistributed in case different people find different opportunities with their gift, be it land or cash (land sold to generate the cash gift). It has been a bit of a nightmare so I am almost at the point of concluding my input into the idea. 

surfer91919

Scorpio33 said:

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)?

Thanks for the helpful reply. Good points. I was advised by a solicitor and an accountant that about 3 years after transfer the gift would only be liable for 20% IHT. The full exemption of IHT comes at 7 years as you say.

surfer91919

Mojisola said:

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?

According to a local architect who deals with a lot of developments in the area it would be realistic to get planning for a 2-3 bed house on one plot. It is small though, garden space would be quite limited if it were a 3 bed. The other plot already has planning for a barn conversion but is off limits from any early inheritance idea at the request of one sibling.

1 sibling expressed an aspiration to live that kind of life so naturally I took that as an aspiration to live that kind of life, as did my father, the other didn't so I looked for a solution where they could dispose of the gift as they chose.

My question was regarding this idea raised recently that any gain resulting from such a gift should be limited in some way and redistributed in case different people find different opportunities with their gift, be it land or cash (land sold to generate the cash gift). It has been a bit of a nightmare so I am almost at the point of concluding my input into the idea and perhaps the other members of the family can come up with a plan or even consult an expert in the field as I did. 

surfer91919

pickledonionspaceraider said:

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

Yeah there are issues. I do not level criticisms about the way any of my family live their lives apart from when it impacts me (e.g my brother hoarding old broken vehicles which I end up spending days helping to repair, however I do so calmly and politely) but I do regularly get my personal situation brought up by them these days.

I would not say I have made better life choices as a blanket statement, just better choices as well as an element of luck leading to being in a position to be able to own a home outright with my partner.
My father asked me to look into this as did other members of the family so I have been actively encouraged to pawn over it.

I have backed off now, thanks for the insights.

surfer91919

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. Have you looked into planning permission for your proposed house, and for the other two plots of land?

Not sure how it's selfish when I gave them all a leaflet including maps etc 6 months ago explaining the whole thing and they expressed interest in different chunks of land. The land packages were all quite equal in value with mine being the lowest value of the three (may change slightly with an amendment to the valuation due to a technicality).
I didn't ask about planning permission, but yes I have had some site meetings with a building firm experienced in planning and an architect.

My question was regarding this idea raised recently that any gain resulting from such a gift should be limited in some way and redistributed in case different people find different opportunities with their gift, be it land or cash (land sold to generate the cash gift). It has been a bit of a nightmare so I am almost at the point of concluding my input into the idea and perhaps the other members of the family can come up with a plan or consult someone. 

surfer91919

MobileSaver said:

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)?

Yes that's it. They have all been RICS valued very close in value at present, really close in fact, mine being the lowest. Presently 2 out of 3 are in the LDP and could be developed (max 1 small house each). The rest of the land abuts the LDP and would be viable within 8-10 years when the LDP comes up for review.

surfer91919

Mands 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.

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

It was all consulted transparently middle of last year, everyone expressed interest in various small bits with my father retaining the lions share. The small subdivisions for his kids were RICS valued very equally. Yes they could sell as is or add value and sell. Ideas of business use were mooted which I applauded.

I've only ever criticised their choices when there has been a significant knock on effect on me (even then it's polite), in other ways they certainly have made better choices than me. I said partly life choices in the OP- luck comes into it too as with everything. However I have always tried hard to save, avoid spending money on frivolities (anything practical- I learn how to do it and rarely use tradesmen, mechanics or even fuel stations/ mainstream fuels).

I agree on the sell up plan, it's the best way to take all the whatiffs away, many parts could even be sold off without effecting the peace of the main part of the property which remained and option with the previous plans.

Keep_pedalling

surfer91919 said:

Scorpio33 said:

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)?

Thanks for the helpful reply. Good points. I was advised by a solicitor and an accountant that about 3 years after transfer the gift would only be liable for 20% IHT. The full exemption of IHT comes at 7 years as you say.

surfer91919 said:

Scorpio33 said:

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)?

Thanks for the helpful reply. Good points. I was advised by a solicitor and an accountant that about 3 years after transfer the gift would only be liable for 20% IHT. The full exemption of IHT comes at 7 years as you say.

Either the solicitor was useless or you misunderstood what he/she said. Taper relief only applies to gifts over the NRB so gifts of anything under £325k does not get it. You have the amount of relief wrong as well.

Time passed.    IHT Rate
< 3 years.             40%
3-4 years.             32%
4-5 years.             24%
5-6 years.             16%
6-7 years                8%

So if for example your father gave away £500k retained £1M and died 4 years and one day later, £325k would be taxed at 40% and the remaining £175k would drop to 24%. 

One other potential tax issue is that your father could have a CGT liability if he splits the land up and gifts part of it to his children. If the existing area is under 0.5 hectare then this is not a problem but over that then there could be an issue (gifting to connected persons is treated no differently that selling at full market rate to as far as CGT is concerned)

https://www.thefriendlyaccountants.co.uk/tax-implications-of-selling-your-garden/