Probate/Inheritance tax with estranged siblings

kateetak

I have an inheritance tax question. My grandfather passes away in 1986.  My grandmother passed away suddenly intestate in 2013. My father was living with her and has continued to live in the property since her death. My aunt, his only sister, lives in Ireland and is estranged from my father. I'm an only child and my aunt has 4 children. My aunt doesn't contribute any up keep to the house and according to her children, wants nothing to do with it. I'm an only child and I'm trying to sort things out for my father after many years estranged from him. We recently reconciled after his health deteriorated.  

I checked and the house is still in both my grandparents names. I've looked at the UK gov website and the house is above the £325K IHT threshold. According to Zoopla its worth £466K. According to another it’s worth £600K. I'm just wondering what to do thats financially viable for everyone and doesn't force my Dad to leave the house. He's elderly and not in the best health. I’ve suggested he sell it and split the money. He could then move closer to me but change is hard when your older.

Should i begin probate? I saw the IHT may be revised in the next budget. I saw that parents can gift children their property but how would this work with my aunt in Ireland. My parents are divorced and my aunts a widower. Is the £325K threshold an individual allowance? Or is it to do with the estate as a whole? Thanks in advance.

Marcon

kateetak said:

I have an inheritance tax question. My grandfather passes away in 1986.  My grandmother passed away suddenly intestate in 2013. My father was living with her and has continued to live in the property since her death. My aunt, his only sister, lives in Ireland and is estranged from my father. I'm an only child and my aunt has 4 children. My aunt doesn't contribute any up keep to the house and according to her children, wants nothing to do with it. I'm an only child and I'm trying to sort things out for my father after many years estranged from him. We recently reconciled after his health deteriorated.  

I checked and the house is still in both my grandparents names. I've looked at the UK gov website and the house is above the £325K IHT threshold. According to Zoopla its worth £466K. According to another it’s worth £600K. I'm just wondering what to do thats financially viable for everyone and doesn't force my Dad to leave the house. He's elderly and not in the best health. I’ve suggested he sell it and split the money. He could then move closer to me but change is hard when your older.

Should i begin probate? I saw the IHT may be revised in the next budget. 

Your aunt isn't bothered. Your dad may not wish to leave where he's living. Perhaps leave the status quo as it is?

IHT is related to date of death, and if it's revised in a future budget, the chances of any reduction being backdated are close to zero.

kateetak said:

I saw that parents can gift children their property but how would this work with my aunt in Ireland. My parents are divorced and my aunts a widower. Is the £325K threshold an individual allowance? Or is it to do with the estate as a whole? Thanks in advance.

Doesn't matter where the beneficiaries live - if their country of residence gives them an extra tax burden of any description, that's not something the personal representatives (executors or administrators, depending on whether or not there was a will) need to worry about. It might be a bit messier if you sort this out at a later date, but there may be good reasons not to do so now. Best idea is to get a solicitor to give you some help when the time comes...and to draft a will now for your father (and you!), perhaps?

kateetak

Marcon said:

Your aunt isn't bothered. Your dad may not wish to leave where he's living. Perhaps leave the status quo as it is?

IHT is related to date of death, and if it's revised in a future budget, the chances of any reduction being backdated are close to zero.

kateetak said:

I saw that parents can gift children their property but how would this work with my aunt in Ireland. My parents are divorced and my aunts a widower. Is the £325K threshold an individual allowance? Or is it to do with the estate as a whole? Thanks in advance.

Doesn't matter where the beneficiaries live - if their country of residence gives them an extra tax burden of any description, that's not something the personal representatives (executors or administrators, depending on whether or not there was a will) need to worry about. It might be a bit messier if you sort this out at a later date, but there may be good reasons not to do so now. Best idea is to get a solicitor to give you some help when the time comes...and to draft a will now for your father (and you!), perhaps?

Thank you for the above. Can I ask is the IHT owed from the date when my grandmother died? Would that be based off the value of the property at the time of her death? I don't believe we have a record of that if so.

I have left as is as I thought it might be easier due to estrangement. Its good that my instincts were right.

Regarding a will. My Dad likes to emotionally manipulate me with this. I drafted a will for him using freewill which he hasn't signed. He was under the impression he could leave the whole house to all 5 of us, me and my cousins. I told him repeatedly he can only will his half. Its very, very frustrating.

Keep_pedalling

Did you grandparents have wills in place?

If not the rules of intestacy kick it, so on your grand mother’s death the house would be inherited by your father and aunt. You aunt may not want anything to do with it but it is to late to do a deed of variation now, so any will she makes must take into account she is the legal owner of half a house in the UK.The fact that she has not contributed to the upkeep is not relevant and in any case as your father is the only one to have had beneficial interest in the property it is quite right that he is the only one who should be contributing. 

The house can’t be sold until your grandmother’s estate had gone through probate / letters of administration. If the house made up the vast majority of her estate there would be no IHT as the value of the house at the time of death would have been well below her available exemptions as her estate will have the transferable NRB from her husband (assuming her left the bulk of his estate to her). If the house is sold while your aunt is still alive her share will however be subject to CGT.  

The priority now is to sort out your grandmother’s estate, if it is left until your father or aunt dies it is going to be doubly difficult to sort out. You should also speak to your aunt and explain the situation to her.

kateetak

Keep_pedalling said:

Did you grandparents have wills in place?

If not the rules of intestacy kick it, so on your grand mother’s death the house would be inherited by your father and aunt. You aunt may not want anything to do with it but it is to late to do a deed of variation now, so any will she makes must take into account she is the legal owner of half a house in the UK.The fact that she has not contributed to the upkeep is not relevant and in any case as your father is the only one to have had beneficial interest in the property it is quite right that he is the only one who should be contributing. 

The house can’t be sold until your grandmother’s estate had gone through probate / letters of administration. If the house made up the vast majority of her estate there would be no IHT as the value of the house at the time of death would have been well below her available exemptions as her estate will have the transferable NRB from her husband (assuming her left the bulk of his estate to her). If the house is sold while your aunt is still alive her share will however be subject to CGT.  

The priority now is to sort out your grandmother’s estate, if it is left until your father or aunt dies it is going to be doubly difficult to sort out. You should also speak to your aunt and explain the situation to her.

Hi, thanks for your reply. I don't know if my grandfather had a will. I was very young when he passed. My grandmother died unexpectedly after a short stay in hospital 10 years ago. My Father had been living with her for 10 years prior and had been her carer. She didn't leave a will. The land registry has both of my grandparents listed as the owners.

The last thing i heard from my aunt was that the house should be divided equally by all the grandchildren which would mean her children get a bigger share. Obviously i would prefer the house was split as is and my Fathers half left to me. She can then leave her half to her children.

kateetak

How much more difficult would this be to sort out if my aunt or father passes away?

Keep_pedalling

kateetak said:

How much more difficult would this be to sort out if my aunt or father passes away?

Your father and aunt’s estates could not be wound up without first administering your GM’s estate so both would need to be done at the same time, this would complicate things especially for your aunt’s executor who will not be based in the UK. It would be so much easier to sort this out rather than when you are forced to do it at the same time you are grieving for your father. 

RAS

Under the laws of intestacy, half the house "went" to your your dad and half to your aunt when their mother died.

When one of them dies, in the absence of a will, their half goes to their descendants, so you get dad's portion and aunt's children share her half.

Your aunt can't make any decision about how your dad's half is split or about how the whole house is shared after their deaths, just about what happens with her half.

The one complication is that if aunt dies first, her children inherit her portion between them and it may be that they need to turn that into cash, which could affect your dad's right of residence. From this forum we know that in practice it is very hard to extract a resident beneficiary even if there is a legal route to force a sale. 

And we don't know how the Irish rules on things like deprivation of assets work, or if that might be relevant. Maybe ask your cousins?

danco

RAS said:

Under the laws of intestacy, half the house "went" to your your dad and half to your aunt when their mother died.

That's assuming, which is likely, that your grandfather did not leave a will making other arrangements forthe house.

I suppose the first thing to do is to find out if your grandfather left a will. I understand that a will, once probated, is a public document and you can search for it, though I don't know the procedure.

Next would be to get the Land Registry records correct as to current ownership. I don't know how this would be done,. I am sure you could do this yourself, but you might want to use a solicitor.

Once the current ownership is clear, you can discuss what further action works for everyone. Quite possibly taking no action until your father or aunt dies, or else selling now with each of the two getting half the proceeds.