Universal credit pip, house and inheritance

[Deleted User]

Hi

I currently get pip and lcwra universal credit when my parents pass away the house I currently live in with my parents, which is in my parents name is set to be transferred into my name and my brother and sister who live in their own houses are set to receive all of the money my parents had, split between the two of them.

Do I have to inform anyone of anything

elsien

Not until anything actually happens. Because there’s no such thing as an inheritance before someone actually passes away.

Life – divorce, illness, bankruptcy – can get in the way of the best laid plans. 

Presuming the house is still there for you to inherit, and that is what the will says rather than a deed of variation being required, there would be nothing to report anyway. 

peteuk

Equally when one parent passes, then it all automatically transfers to the other partner.  When the second parent passes the whole thing will go to probate. Given that your suggesting the moneys split two ways and the house goes to you, suggests that both may go to probate. 

Spoonie_Turtle

[Deleted User] said:

Hi

I currently get pip and lcwra universal credit when my parents pass away the house I currently live in with my parents, which is in my parents name is set to be transferred into my name and my brother and sister who live in their own houses are set to receive all of the money my parents had, split between the two of them.

Do I have to inform anyone of anything

This bit here suggests there will be nothing at all to affect your benefits, if it happens according to their plan.  Owning a house can only affect means-tested benefits if you don't live it.

[Deleted User]

Ok thank you

HillStreetBlues

Would the will stipulate that arrangement? Also what's the house worth compared to the cash sums?

[Deleted User]

The house is worth £450k and the money is around 250k each

peteuk

[Deleted User] said:

The house is worth £450k and the money is around 250k each

Both will go to probate which currently takes approx 6 months to get through and inheritance tax which will be 40% of £350,000.  Based on current law.  (First £350K is tax free and then anything above is taxed at 40%) So i estimate your inheritance tax to be £140K…

Now comes the bun fight…your get a house worth £450K and your siblings get £125K each.  I know if that was me Id be saying nope not on my watch.   And where is the £140K coming from, its not the sale of the house, so you’ll end up with the potential of you sitting on a house and your siblings paying £140K and then splitting what’s left…so £55K each.

My Dads property is on the market for £300K and he had less than £30K in savings, because his bank account was less than £50K it didn’t go through probate.  Because it’s less the whole estate is less than £350K then theres no inheritance tax.  The house is to be sold and what’s left is decided by the three of us.  By the time solicitors, estates agents have been paid were looking at £100K each.   Personally Id rather have my parents than the money. 

Just my opinion…

LightFlare

peteuk said:

[Deleted User] said:

The house is worth £450k and the money is around 250k each

Both will go to probate which currently takes approx 6 months to get through and inheritance tax which will be 40% of £350,000.  Based on current law.  (First £350K is tax free and then anything above is taxed at 40%) So i estimate your inheritance tax to be £140K…

Now comes the bun fight…your get a house worth £450K and your siblings get £125K each.  I know if that was me Id be saying nope not on my watch.   And where is the £140K coming from, its not the sale of the house, so you’ll end up with the potential of you sitting on a house and your siblings paying £140K and then splitting what’s left…so £55K each.

My Dads property is on the market for £300K and he had less than £30K in savings, because his bank account was less than £50K it didn’t go through probate.  Because it’s less the whole estate is less than £350K then theres no inheritance tax.  The house is to be sold and what’s left is decided by the three of us.  By the time solicitors, estates agents have been paid were looking at £100K each.   Personally Id rather have my parents than the money. 

Just my opinion…

Doesn’t matter whose watch it’s on - if the will stipulates something then that’s how the estate MUST be distributed.

You could contest, but it would be a pointless waste of money in this scenario (imo)

IHT may also not be due if the mother inherited from a deceased father - the threshold will be much higher. 


Also, your maths is wrong - it’s 250k EACH

Grumpy_chap

peteuk said:

[Deleted User] said:

The house is worth £450k and the money is around 250k each

Both will go to probate which currently takes approx 6 months to get through and inheritance tax which will be 40% of £350,000.  Based on current law.  (First £350K is tax free and then anything above is taxed at 40%) So i estimate your inheritance tax to be £140K…

Now comes the bun fight…your get a house worth £450K and your siblings get £125K each.  I know if that was me Id be saying nope not on my watch.   And where is the £140K coming from, its not the sale of the house, so you’ll end up with the potential of you sitting on a house and your siblings paying £140K and then splitting what’s left…so £55K each.

The OP speaks of this as being the parents house (which I read as being both parents - the family home / main residence).
Why wouldn't the IHT threshold be £1M?  Two allowances £325 each plus two main residence allowances £175 each.
That would solve the last part of the query as to where the IHT is paid from.

The discrepancy in values inherited would be £450k house to OP and £250k each to the siblings.
The siblings may be perfectly satisfied with that.  They may feel they have done OK in life and happy to see their sibling benefit.
The issue might well arise if the £500k of cash is not still at that sort of level by the time the second parent passes.  The parents might spend a large amount on a sports car, posh cruise, or care fees.
Have the parents considered that this imbalance might well result in OP receiving the house and the two siblings effectively written out of the Will altogether?

I have read the OP's case that both parents are alive and the need to deal with the Will is some time away.  An early question to understand what happens at a future date.

peteuk

Apologises didn’t notice the £250K each…

House £450K
Savings £500K

Total estate £950K

Inheritance tax threshold £500K (due to house being passed to child/estate is less than £2m) 
Then if right there is still an inheritance tax of 40% on £450K which is £180K…

Which leaves the cash sum to be reduced £320K or £160 each. If tax is paid from the savings as that is the usable assess unless you sell the house and pay a sum towards the tax and then buy a new house….

Or I may be wrong!  Who knows.