Will / tenants in common & IHT

cohl123

Hi all - having nightmares about potential IHT and issues I may have have when God forbid anything happens to my mum.

Two solicitors, two IFAs and an accountant all say different things. 


My mum and dad owned the house 50/50 as tenants in common.

1. My mum and dad weren't married
2. My dad passed away suddenly in 2017
3. Wills are mirror wills - I'll redact and upload - property goes to surviving partner in trust and me as trustees.
4. I did the probate and IHT and for my dad (as the solics from CLS has no clue - think I posted on here at the time under another username.
5. I wasn't aware I needed to do anything with the land registry so it currently still states my dad and mum's name.
6. My mum has terminal cancer 
7. Have started LPA process but this could take 20 weeks (and won't really help here).


My worry is; I included 50% of the property in my dad's probate and the solics who produced the will states I would need to put 100% of the property. One ifa disagrees, the other ifa says "could go either way but you don't know until.probate decides". Thankfully the solics doing the LPA are saying they will be able to tell me when they've looked into it.

Many thanks. Been very stressful.

cohl123

Mirror wills:

bobster2

cohl123 said:

My worry is; I included 50% of the property in my dad's probate and the solics who produced the will states I would need to put 100% of the property. One ifa disagrees, the other ifa says "could go either way but you don't know until.probate decides". Thankfully the solics doing the LPA are saying they will be able to tell me when they've looked into it.

Many thanks. Been very stressful.

If your dad only owned a 50% share of the property - as a tenant in common - then how could any more than 50% of the value of the property form part of his estate for probate?

cohl123

Sorry - to clarify for my dad's probate it was 50%

My concern is having clarity for what is out down in my mums probate.

The solics seems to believe that as there is a life interest the value of the property on my mums probate form would be 100% (and imo that's accounting for 150% of the same property..)

Keep_pedalling

The complication here is that they were not married or in a civil partnership, so there is no spousal exemption. On your father’s death his share of the house would have used up at least some of his NRB, and if that his total estate was in excess of £325k then IHT would have been payable on everything over that. If his death happened after the 6th April 2017 it would have been possible to use his residential NRB with a deed of variation but unfortunately that option is long gone.

Although the trust is the legal owner of his share of the house your mother is the beneficial owner of the whole house so it will form part of her estate for IHT purposes, so if her net estate exceeds £500k then I am afraid IHT will be due. Had they been married there would have been no IHT on his estate and your mother’s estate would have up to £1M in exemptions available.

cohl123

Ahh !!!!!! don't say that the solics (first one, second one looking into this) said this but IFAs disagree.

He died the month before that April change but as you say its long gone anyway 

I don't understand how my mum is the beneficial owner though- the owners are the trustees - my mum and me ? So imo his 50% goes in trust and is owned by my mum and me.

I don't see how it's right that 150% of the house is taxable across two probates.

Keep_pedalling

The trust is the legal owner, your mother is the beneficial owner, and for IHT purposes the liability is with the beneficial owner.

These sorts of trust work really well for married couples or couples within a CP, but for unmarried couples they offer security but no tax benefits and in some cases actually increase the tax burden. 

cohl123

Aren't the beneficiaries me and my mother as trustees (with no explicitly mention of beneficiaries)

Keep_pedalling

Your mother is the sole beneficiary of the trust. You are the remainderman who will inherit it on your mother’s death. The only tax advantage here is that CGT will not apply on any gain in value since 2007. 

What is the approximate value of your mother’s estate including the full value of the house?