Property and IHT pointers

jsh99

Hi all,

Hope this is the right place for this.......

Married parents, father died Jan 2023 with less than £6,000 so did not apply for probate, as advised by a paralegal.

Mother had house built in 1960s.
Was in her name only initially on deeds.
Had her son - my half brother - added to deeds in 1999 as advised for IHT purposes.
There is nothing on the LR entry to say if 'tenants in common' or 'joint tenants'.
No wills.
House probably worth around £600,000 ish.  

Can anyone advise on the following please:

Do we get the £325,000 allowance on the property for my father passing, as they were married?
How can I find out if TIC or JT if it's not on the LR?  I have no idea where the deeds are nor does my mother/brother.

If my brother dies first I assume it all goes to my mother? 
But if mum dies first what will happen to the property for IHT purposes?

Many thanks, JH99

Keep_pedalling

Sounds like your mother got some pretty crappy advice regarding IHT, which her estate almost certainly would never pay. As a widow with a £600k house her estate would need to exceed £1M before any IHT was due because both the transferable NRB and transferable residential NRB on her estate.

Unless your step brother is living with your mother then the gift is one with reservation of benefit so the 7 year rule does not apply, so even after 7 years have passed it will still count as part of her estate for IHT purposes. 

Your mother now should make a new will to take account of the gift to one of her children (giving her other children a larger portion of her estate). She should also make sure the house is not owned as joint tenants, and if it is to sever the tenancy to convert to tenants in common. 

jsh99

Keep_pedalling said:

Sounds like your mother got some pretty crappy advice regarding IHT, which her estate almost certainly would never pay. As a widow with a £600k house her estate would need to exceed £1M before any IHT was due because both the transferable NRB and transferable residential NRB on her estate.

Unless your step brother is living with your mother then the gift is one with reservation of benefit so the 7 year rule does not apply, so even after 7 years have passed it will still count as part of her estate for IHT purposes. 

Your mother now should make a new will to take account of the gift to one of her children (giving her other children a larger portion of her estate). She should also make sure the house is not owned as joint tenants, and if it is to sever the tenancy to convert to tenants in common. 

So the transfer of IHT is still ok from my father even though his name was never on the house deeds?

My half brother lives in the house - always has and will.  So I understand his share, whatever that is, does not count as part of her estate?

I will talk to her about the conversion to tenants in common - I see this requires a solicitor.

Keep_pedalling

jsh99 said:

Keep_pedalling said:

Sounds like your mother got some pretty crappy advice regarding IHT, which her estate almost certainly would never pay. As a widow with a £600k house her estate would need to exceed £1M before any IHT was due because both the transferable NRB and transferable residential NRB on her estate.

Unless your step brother is living with your mother then the gift is one with reservation of benefit so the 7 year rule does not apply, so even after 7 years have passed it will still count as part of her estate for IHT purposes. 

Your mother now should make a new will to take account of the gift to one of her children (giving her other children a larger portion of her estate). She should also make sure the house is not owned as joint tenants, and if it is to sever the tenancy to convert to tenants in common. 

So the transfer of IHT is still ok from my father even though his name was never on the house deeds?

Yes.

My half brother lives in the house - always has and will.  So I understand his share, whatever that is, does not count as part of her estate?

As he is living their permanently the gift should fall out of her estate after 7 years, but as her estate seems well below IHT territory  that is not really of great importance.

I will talk to her about the conversion to tenants in common - I see this requires a solicitor.

If this is likely to be his long term home after she dies then she might also consider giving him a life interest in her share. He also should make a will to cover him predeceasing your mother.

jsh99

Keep_pedalling said:

If this is likely to be his long term home after she dies then she might also consider giving him a life interest in her share. He also should make a will to cover him predeceasing your mother.

The thing that concerns me with all this is once he passes on and leaves everything to me - I'll have to pay IHT on everything - unless the house is as tenants in common in which case her share can pass to me.  Because all the allowances are only between married couples and to children  Not from sibling to sibling.

She has said verbally to me that after my brother passes she wants it all to pass to me.

Keep_pedalling

jsh99 said:

Keep_pedalling said:

If this is likely to be his long term home after she dies then she might also consider giving him a life interest in her share. He also should make a will to cover him predeceasing your mother.

The thing that concerns me with all this is once he passes on and leaves everything to me - I'll have to pay IHT on everything - unless the house is as tenants in common in which case her share can pass to me.  Because all the allowances are only between married couples and to children  Not from sibling to sibling.

She has said verbally to me that after my brother passes she wants it all to pass to me.

I am not sure why you  think you will have to pay IHT in everything. Your mother’s estate appears to be too small to be subject to IHT. Your brother’s estate may very well be subject to IHT but his estate will pay for that not put you. Whatever you mother says she wants to happen after your step brother’s has died has no influence on what will happen, that will depend on his will or the laws of intestacy if he does not have one. 

RAS

To put it a bit more bluntly, what your mother wants to happen to the house could be irrelevant. Certainly what she wants to happen to it after your brother's death is irrelevant. He can leave it to the cat's home, his new squeeze if he wants, that it not her decision to make, or it could get eaten up by care home fees.

Anyone who suggested these IHT plans in 1999 without explaining that to her wasn't very clued up.

You need to start by downloading the basic deeds from the Land Registry website, go to the proper gov.uk site and that costs £3.

Then come back and tell us whether it names mum and brother, or just brother? And it it names both, is there any clause starting " No disposition by a sole....."?

jsh99

RAS said:

To put it a bit more bluntly, what your mother wants to happen to the house could be irrelevant. Certainly what she wants to happen to it after your brother's death is irrelevant. He can leave it to the cat's home, his new squeeze if he wants, that it not her decision to make, or it could get eaten up by care home fees.

Anyone who suggested these IHT plans in 1999 without explaining that to her wasn't very clued up.

You need to start by downloading the basic deeds from the Land Registry website, go to the proper gov.uk site and that costs £3.

Then come back and tell us whether it names mum and brother, or just brother? And it it names both, is there any clause starting " No disposition by a sole....."?

I already got the LR entry - as I said in original post it names them both but nothing about TIC or JT.  Nothing is mentioned at all under the section Proprietor section B.  I believe this means when one dies the other inherits the whole property.

I probably should have stated that there is no one else - brother never married and has no children.  There is only me and brother has no will.

jsh99

Keep_pedalling said:

jsh99 said:

Keep_pedalling said:

If this is likely to be his long term home after she dies then she might also consider giving him a life interest in her share. He also should make a will to cover him predeceasing your mother.

The thing that concerns me with all this is once he passes on and leaves everything to me - I'll have to pay IHT on everything - unless the house is as tenants in common in which case her share can pass to me.  Because all the allowances are only between married couples and to children  Not from sibling to sibling.

She has said verbally to me that after my brother passes she wants it all to pass to me.

I am not sure why you  think you will have to pay IHT in everything. Your mother’s estate appears to be too small to be subject to IHT. Your brother’s estate may very well be subject to IHT but his estate will pay for that not put you. Whatever you mother says she wants to happen after your step brother’s has died has no influence on what will happen, that will depend on his will or the laws of intestacy if he does not have one. 

No will and no other family - there is no one else.

Keep_pedalling

jsh99 said:

RAS said:

To put it a bit more bluntly, what your mother wants to happen to the house could be irrelevant. Certainly what she wants to happen to it after your brother's death is irrelevant. He can leave it to the cat's home, his new squeeze if he wants, that it not her decision to make, or it could get eaten up by care home fees.

Anyone who suggested these IHT plans in 1999 without explaining that to her wasn't very clued up.

You need to start by downloading the basic deeds from the Land Registry website, go to the proper gov.uk site and that costs £3.

Then come back and tell us whether it names mum and brother, or just brother? And it it names both, is there any clause starting " No disposition by a sole....."?

I already got the LR entry - as I said in original post it names them both but nothing about TIC or JT.  Nothing is mentioned at all under the section Proprietor section B.  I believe this means when one dies the other inherits the whole property.

I probably should have stated that there is no one else - brother never married and has no children.  There is only me and brother has no will.

Your mother needs to make an appointment with a solicitor to make sure what she wants to happen does actually happen. She needs to split the tenancy (this can be done by either owner, it does not need both to agree) and she needs to make a new will leaving her half to you and possible give your step brother a life interest for his security. 

Your step brother also needs to make a will. You say there are only the two of you but can you be totally sure his father had no other children? His will needs to cover the risk that he dies first. Your mother would inherit if he died intestate, which could leave her estate deep in IHT territory. 

jsh99

Keep_pedalling said:

jsh99 said:

I already got the LR entry - as I said in original post it names them both but nothing about TIC or JT.  Nothing is mentioned at all under the section Proprietor section B.  I believe this means when one dies the other inherits the whole property.

I probably should have stated that there is no one else - brother never married and has no children.  There is only me and brother has no will.

Your mother needs to make an appointment with a solicitor to make sure what she wants to happen does actually happen. She needs to split the tenancy (this can be done by either owner, it does not need both to agree) and she needs to make a new will leaving her half to you and possible give your step brother a life interest for his security. 

Your step brother also needs to make a will. You say there are only the two of you but can you be totally sure his father had no other children? His will needs to cover the risk that he dies first. Your mother would inherit if he died intestate, which could leave her estate deep in IHT territory. 

OK - got it - in fact we did some sorting out yesterday - had a legal advisor visit to do an LPA.  We discussed the situation and he's also completing a Notice of Severance, a life interest trust for my brother and a will for mum to leave me her half.

Had not thought about brother going first - sigh - so his will needs to leave me his half and a life interest trust for mum?  No idea about any half siblings for him - no one has ever talked about his dad and the one and only time I mentioned it (because I thought I was adopted and asked if I was due to the big age gap) she told me, and I quote, 'it's got nothing to do with you'.