Elderly relative ill and not sure what her son's situation might be

Flugelhorn

If they haven't made a will - have they actually got round to ensuring that the property is TiC and not joint? 

Malthusian

reheat said:

One other thought. When someone dies intestate, does that affect how inheritance tax is calculated? 

Only in the sense that the IHT calculation can be changed by who you leave your property to, due to spousal exemptions, and the Residence Nil Rate Band requirement for a home to be left to direct descendants.

Someone who leaves their estate to A B and C via intestacy is taxed exactly the same as someone who leaves their estate to A B and C via a Will. 

The mother's half of the property is about £350,000, and has around £25,000 savings. Could the son be in a situation, even though over 60, where he might have to sell the house in order to pay inheritance tax?

Is she a widow? If she was married, her husband could have transferred up to £500,000 in Nil Rate Band and Residence Nil Rate Band to her, minus any he used on his own estate.

So she has at least £500,000 of IHT allowance (full RNRB available as she is leaving a share in her home to direct descendants) and potentially as much as £1 million if she is a widow.

Selling the home so his sister (your wife) can access her inheritance sounds more likely.

reheat

Malthusian said:

reheat said:

One other thought. When someone dies intestate, does that affect how inheritance tax is calculated? 

Only in the sense that the IHT calculation can be changed by who you leave your property to, due to spousal exemptions, and the Residence Nil Rate Band requirement for a home to be left to direct descendants.

Someone who leaves their estate to A B and C via intestacy is taxed exactly the same as someone who leaves their estate to A B and C via a Will. 

The mother's half of the property is about £350,000, and has around £25,000 savings. Could the son be in a situation, even though over 60, where he might have to sell the house in order to pay inheritance tax?

Is she a widow? If she was married, her husband could have transferred up to £500,000 in Nil Rate Band and Residence Nil Rate Band to her, minus any he used on his own estate.

So she has at least £500,000 of IHT allowance (full RNRB available as she is leaving a share in her home to direct descendants) and potentially as much as £1 million if she is a widow.

Selling the home so his sister (your wife) can access her inheritance sounds more likely.

Thank you. The mother is a widow. My wife would wish for the son to not have to sell the house, so would not wish to take any share of it left to her. Presumably this has to be done correctly, so her brother would not be liable to any tax on it if it were perceived as part of his income?

Malthusian

reheat said:

Thank you. The mother is a widow. My wife would wish for the son to not have to sell the house, so would not wish to take any share of it left to her. Presumably this has to be done correctly, so her brother would not be liable to any tax on it if it were perceived as part of his income?

They can agree to a Deed of Variation whereby the Will is rewritten so that the quarter that would have gone to your wife is either inherited absolutely by her brother, or by a life interest trust with him as the life tenant. (This would fulfil her wish for him to not have to sell the house, but she or her heirs would still receive the value of her quarter on his death.)

If done within two years of death a DOV would be treated for tax purposes as if the mother wrote her Will that way originally. If done after two years - or if your wife simply gave her quarter to her brother -  it would be treated the same way as any other gift by your wife, i.e. if she died within seven years it would fall back into her estate and her estate could pay IHT on it on her death.

There is no tax on gifts in this country and there's no scenario in which your wife giving her quarter of the house to her brother would be taxed as income.

reheat

Regards applying for Attendance Allowance. It is the mother who needs to apply for it, but she is in hospital, and her mental capacity varies greatly from day to day, on less than good days there is no chance should could deal with it, and on other days maybe.

I know the web info says to ring and ask for a form. Will it be OK for her son to make that phone call and ask for a form made out in his mother's name? Or would he need power of attorney even to do that?

RAS

thegreenone said:

Attendance Allowance is not Means Tested.  As her son is there overnight, she should apply for full rate.  Once it's granted,  I don't think it can be taken away.  Apply NOW.  Even if Mum has to go into care, it will still be paid but attributed to care costs.

I don't think the house will be taken into consideration as son owns half, is over 60 and lives there permanently. 

The son should have long  applied for attendance allowance for mum, which is not means-tested. But if she is now in hospital, then I think it halts after 6 weeks, until she returns home.

We definitely got it and there was definitely enough income to cover a lot of the care home fees, and capital left to "justify" IHT.