Intestate Estate - How to deal with property, savings, work benefits?

GoogleMeNow

An adult daughter has recently died intestate, leaving behind parents (mum and dad 80's), one sibling and one live-in boyfriend of 8 years.  There are no children and adult daughter was divorced from ex-husband (was a fairly short marriage of 5 years ish).

There is a property, savings and a death in service lump sum of 4 x salary.   Property is worth around £800k, savings not sure, death in service around £400k.  There is also a work pension.   

Parents are now starting to deal with the administration.  

Parents want to allow boyfriend to live in the property for as long as needed without paying rent, but he would be responsible for utility bills. They are not sure whether to gift him the property entirely or transfer the property to their own name or keep the property in daughter's name.  Obviously they want to save as much money from the tax man as they legitimately can.

Would assenting the property from daughter's estate to parent's name incur any penalties, i.e. stamp duty, or would it be worth leaving it in the daughter's name be advisable?  The parents are not selling the property yet, but might do in the future, so capital gains could be due?  

Boyfriend lives in the property but is not named on the deeds, mortgage or utility bills.  I assume he would become a tenant of the parents if he continues to live there?  Daughter had consistently verbally insisted that it was her property only and while she wouldn't want to make boyfriend homeless, he was not going to be left the property.  However, obviously, without any written wishes, instructions or Will, there have been discussions about what to do? 

Should the parents let boyfriend live there indefinitely, do they buy him a property elsewhere of his choosing, do they gift him the property which he can do whatever he likes.  He has two children from previous relationships and doesn't come from where she lived but moved there to be with her.  Their relationship was volatile with various splits, but they were still together when she passed.

Verbally, she had actually told her brother that "everything" would go to him (they were very close), but she probably thought that her parents would have pre-deceased her, due to her relatively young age.

Brother feels that his parents and the boyfriend are making decisions and have removed him from being involved since under intestacy laws, the parents would inherit the estate anyway, but feels that the parents need to think first before going ahead with their plans.

Does anyone have any legal, tax or probate knowledge that can help advise?

Keep_pedalling

Whatever they do the daughter’s estate is going to have a significant IHT liability (the only way to avoid it is to give everything above £325k to charity).

I don’t think the death benefits from the pension scheme forms part of her estate. Had she nominated anyone as the beneficiary? 

The parents will inherit it all the under intestacy rules but that is going to leave them with a significant IHT liability themselves. The option here is to make a deed of variation to pass their inheritance to the sibling and or partner. 

theoretica

The parents could do a deed of variation to pass on the estate now - this would remove the chance of double IHT, only paying it now and not on their deaths (there is some relief on two deaths happening in quick succession, but it isn't great.)  This would be a problem if they needed means tested benefits themselves, but this doesn't sound like it will be the case.

She might have already nominated to whom the death in service payment goes - worth checking that if they haven't already.

It might be worth talking with BF about alternatives to having him living longer term in that very house.  Selling it and giving him a lump sum (five years rent?) would have a lot of simplicity about it for them and for not becoming landlords while ensuring he did not become homeless and might be fair to all concerned.

Marcon

GoogleMeNow said:

An adult daughter (50's) has recently died intestate, leaving behind parents (mum and dad 80's), one sibling and one live-in boyfriend of 8 years.  There are no children and adult daughter was divorced from ex-husband in 2016 (was a fairly short marriage of 5 years ish).

There is a property, savings and a death in service lump sum of 4 x salary.  Lived in London so property is worth around £800k, savings not sure, death in service around £400k.  There is also a work pension.  Don't believe there are stocks and shares or overseas investments. 

Parents are now starting to deal with the administration.  

Parents want to allow boyfriend to live in the property for as long as needed without paying rent, but he would be responsible for utility bills. They are not sure whether to gift him the property entirely or transfer the property to their own name or keep the property in daughter's name.  Obviously they want to save as much money from the tax man as they legitimately can.

Would assenting the property from daughter's estate to parent's name incur any penalties, i.e. stamp duty, or would it be worth leaving it in the daughter's name be advisable?  The parents are not selling the property yet, but might do in the future, so capital gains could be due?  On parents death, there is likely to be considerable inheritance tax to pay as their own property and savings are likely to be in the region £1.5m, without considering daughter's estate.

Boyfriend lives in the property but is not named on the deeds, mortgage or utility bills.  I assume he would become a tenant of the parents if he continues to live there?  Daughter had consistently verbally insisted that it was her property only and while she wouldn't want to make boyfriend homeless, he was not going to be left the property.  However, obviously, without any written wishes, instructions or Will, there have been discussions about what to do? 

Should the parents let boyfriend live there indefinitely, do they buy him a property elsewhere of his choosing, do they gift him the property which he can do whatever he likes.  He has two children from previous relationships and doesn't come from London, but moved there to be with her.  Their relationship was volatile with various splits, but they were still together when she passed.

Verbally, she had actually told her brother that "everything" would go to him (they were very close), but we presume she would have naturally thought that her parents would have pre-deceased her, due to her age/their age.

Brother feels that his parents and the boyfriend are making decisions and have removed him from being involved since under intestacy laws, the parents would inherit the estate anyway, but feels that the parents need to think first before going ahead with their plans.

Does anyone have any legal, tax or probate knowledge that can help advise?

Yes: a lawyer with experience of this area. This has the potential to turn into a right pickle, and with a disgruntled brother, elderly parents and a sad boyfriend (who may not have an automatic claim on the estate, but could still apply for 'reasonable provision'), with everyone grieving, relying on advice on the internet isn't going to cut it.

aliby21

GoogleMeNow said:

Boyfriend lives in the property but is not named on the deeds, mortgage or utility bills.  I assume he would become a tenant of the parents if he continues to live there?  

Is there still a mortgage on the property? if so much of the rest of the discussion becomes moot.

If mortgage free, are there sufficient assets in the rest of the estate to pay the inheritance tax, without selling the house? 

If letting boyfriend live there indefinitely, do the parents want to become landlords, do they understand the responsibilities this entails, are they willing to take on any maintenance costs etc?

What are the thoughts behind 'giving' the house to the boyfriend? do they think that is fair the fair thing to do, or that it will make life easier to just get it off their hands? are they aware of what the brother/their son thinks? 

as others have said worth finding out if daughter had nominated anyone for her death in service benefit.  As much as anything else it might guide parents as to daughter's thoughts/wishes.

Keep_pedalling

Ialiby21 said:

GoogleMeNow said:

Boyfriend lives in the property but is not named on the deeds, mortgage or utility bills.  I assume he would become a tenant of the parents if he continues to live there?  

Is there still a mortgage on the property? if so much of the rest of the discussion becomes moot.

If mortgage free, are there sufficient assets in the rest of the estate to pay the inheritance tax, without selling the house? 

If letting boyfriend live there indefinitely, do the parents want to become landlords, do they understand the responsibilities this entails, are they willing to take on any maintenance costs etc?

What are the thoughts behind 'giving' the house to the boyfriend? do they think that is fair the fair thing to do, or that it will make life easier to just get it off their hands? are they aware of what the brother/their son thinks? 

as others have said worth finding out if daughter had nominated anyone for her death in service benefit.  As much as anything else it might guide parents as to daughter's thoughts/wishes.

It would be possible to allow him to continuing living there without becoming landlords through the use of an DoV creating an immediate post death interest trust. Personally I would not do that as it is not that straight forward when the life tenant is not a spouse or civil partner.

In their position I would be look at trying to be fair and be guided by what I think my daughter would have wanted to happen had she actually made a will. The simple solution would be to sell up and after IHT has been paid distribute  the estate between themselves, sibling and partner as they think fit, again using a deed of variation. Assuming the house is not mortgages the IHT bill on that alone is going to be £130k so if her other assets (after tax) are less than that a house sale may be forced anyway.

GoogleMeNow

Thanks everyone for your comments and advice.

To answer as best I can:

I have since found out that there is no mortgage on the property.

We have broached the subject of double IHT on the parents inheriting the whole lot and then, again being subject to IHT on their deaths.  However, the father's stance is that he is happy to pay IHT on the estate and basically doesn't care that there will be another IHT amount due when they pass (as it won't be 'their problem').  

The daughter did not nominate anyone to benefit from her pension, nor her death-in-service lump sum.

The parents want to help the boyfriend as he was financially dependent on their daughter and had lived in her property for the last 8 years.  They have no idea what being a landlord involves.  

The parents have told the son that he will benefit from their Will when they pass and will get the daughter's share at that time (therefore, he doesn't need to benefit from her estate now).

So, if parents go ahead with themselves inheriting the whole estate, would it be advisable to transfer (or assent) the property to their own names or leave it in the daughter's name?  Would they have to pay the additional stamp duty (+3%) for the additional property?

p00hsticks

GoogleMeNow said:

So, if parents go ahead with themselves inheriting the whole estate, would it be advisable to transfer (or assent) the property to their own names or leave it in the daughter's name?  Would they have to pay the additional stamp duty (+3%) for the additional property?

As far as I'm aware you don't pay SDLT on inherited property. 

Marcon

GoogleMeNow said:

Thanks everyone for your comments and advice.

To answer as best I can:

I have since found out that there is no mortgage on the property.

We have broached the subject of doubt IHT on the parents inheriting the whole lot and then, again being subject to IHT on their deaths.  However, the father's stance is that he is happy to pay IHT on the estate and basically doesn't care that there will be another IHT amount due when they pass (as it won't be 'their problem').  

The daughter did not nominate anyone to benefit from her pension, nor her death-in-service lump sum.

The parents want to help the boyfriend as he was financially dependent on their daughter and had lived in her property for the last 8 years.  They have no idea what being a landlord involves.  

The parents have told the son that he will benefit from their Will when they pass and will get the daughter's share at that time (therefore, he doesn't need to benefit from her estate now).

So, if parents go ahead with themselves inheriting the whole estate, would it be advisable to transfer (or assent) the property to their own names or leave it in the daughter's name?  Would they have to pay the additional stamp duty (+3%) for the additional property?

There is clearly plenty of money in the estate to pay for professional advice. I appreciate you are trying to help, but setting yourself up as some sort of properly informed source, when you appear to be relying on random strangers for your 'information', is a high speed route to trouble.

Just point them towards getting qualified and (crucial!) advice from someone who is insured to give it.

Keep_pedalling

Marcon said:

GoogleMeNow said:

Thanks everyone for your comments and advice.

To answer as best I can:

I have since found out that there is no mortgage on the property.

We have broached the subject of doubt IHT on the parents inheriting the whole lot and then, again being subject to IHT on their deaths.  However, the father's stance is that he is happy to pay IHT on the estate and basically doesn't care that there will be another IHT amount due when they pass (as it won't be 'their problem').  

The daughter did not nominate anyone to benefit from her pension, nor her death-in-service lump sum.

The parents want to help the boyfriend as he was financially dependent on their daughter and had lived in her property for the last 8 years.  They have no idea what being a landlord involves.  

The parents have told the son that he will benefit from their Will when they pass and will get the daughter's share at that time (therefore, he doesn't need to benefit from her estate now).

So, if parents go ahead with themselves inheriting the whole estate, would it be advisable to transfer (or assent) the property to their own names or leave it in the daughter's name?  Would they have to pay the additional stamp duty (+3%) for the additional property?

There is clearly plenty of money in the estate to pay for professional advice. I appreciate you are trying to help, but setting yourself up as some sort of properly informed source, when you appear to be relying on random strangers for your 'information', is a high speed route to trouble.

Just point them towards getting qualified and (crucial!) advice from someone who is insured to give it.

I have to agree with this, but with the father’s odd attitude I suspect this might not happen.

The first thing to establish is who the trustees of the pension fund will be looking to pay the death in service benefit to. If it is the parents then it may be possible for them to forgo this in favour of the dependant partner. If that is not possible to do this then they could divert part of the inheritance to him, but it would be foolish in the extreme not to use a deed of variation to do this.

GoogleMeNow

Marcon said:

GoogleMeNow said:

Thanks everyone for your comments and advice.

To answer as best I can:

I have since found out that there is no mortgage on the property.

We have broached the subject of doubt IHT on the parents inheriting the whole lot and then, again being subject to IHT on their deaths.  However, the father's stance is that he is happy to pay IHT on the estate and basically doesn't care that there will be another IHT amount due when they pass (as it won't be 'their problem').  

The daughter did not nominate anyone to benefit from her pension, nor her death-in-service lump sum.

The parents want to help the boyfriend as he was financially dependent on their daughter and had lived in her property for the last 8 years.  They have no idea what being a landlord involves.  

The parents have told the son that he will benefit from their Will when they pass and will get the daughter's share at that time (therefore, he doesn't need to benefit from her estate now).

So, if parents go ahead with themselves inheriting the whole estate, would it be advisable to transfer (or assent) the property to their own names or leave it in the daughter's name?  Would they have to pay the additional stamp duty (+3%) for the additional property?

There is clearly plenty of money in the estate to pay for professional advice. I appreciate you are trying to help, but setting yourself up as some sort of properly informed source, when you appear to be relying on random strangers for your 'information', is a high speed route to trouble.

Just point them towards getting qualified and (crucial!) advice from someone who is insured to give it.

Thanks Marcon.  We have pointed them towards getting qualified and crucial advice.  Unfortunately, they think they know best and will most certainly not pay for a professional to tell them anything they don't already know (hmmm).  According to the father, the law is an A.S.S.  At the end of the day, it doesn't really matter what advice we can give them, they will do whatever they want to.  Looks like sibling (my husband) will be paying a huge IHT bill on their passing (both in their 80s in very poor health)