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

GoogleMeNow

Marcon said:

GoogleMeNow said:

Savvy_Sue said:

GoogleMeNow said:

Keep_pedalling said:

Your husband’s parents do at least seem genuinely concerned about the partner, do you and your husband have a good relationship with him? 

Yes, we do have a good relationship with him.  We, as a family, are in agreement that he shouldn't be homeless. I think what has been the sticking point, is that the parents are changing their mind from day to day over whether to gift him the property entirely (which is the majority of the value of the estate), or whether to let him live there indefinitely as a tenant.  Don't believe they have discussed this with him yet.

Has anyone considered how they'd feel about him moving a new girlfriend in? Or asked if he WANTS to stay there? You said, I think, that there were ups and downs in the relationship, he may want to move on. 

These are all thoughts that I and husband have been considering.  Unfortunately, the parents haven't considered them and it is they who are administering the estate.  We are trying to advise them as best we can to make them think and consider the consequences of their actions, but the father is not very amenable to listening to anybody else's point of view. 

The boyfriend has already said that he doesn't know (yet) how he feels about living there.  At the moment it is still very raw and he is grieving, as are we all.

The mother had a stroke a couple of months ago and cannot concentrate or take in much of what we tell her. 

I started this thread to merely gather information with which to present to them for consideration. I am not trying to take the place of a legally qualified professional, just wanted them to think about the situation from a legal point of view and not make silly decisions which they might regret.

We have already advised that they pay a solicitor for some advice, but they believe all solicitors are only out for making money for themselves.  It is pointless trying to convince them otherwise.  

We are aware that there will still be a substantial inheritance to probably come to my husband in the future (barring all care home costs etc), but even people with substantial estates want to make good decisions regarding estate planning.

Indeed.

You started this thread by saying the daughter had died 'recently', so possibly just waiting a short while until some of the rawest edges of the grief have subsided a little might be no bad idea. That's going to leave the boyfriend in limbo, but as it's clear he isn't going to be thrown out on his ear, he might possibly appreciate the breathing space to consider how he feels?

Yes, we do need to allow time for us all to get to grips with it.  

The boyfriend does need some breathing space - he's not sure what they are offering him other than not to be made homeless.  One minute they are saying it's his house and therefore he should have it (no, it was their daughter's), next minute the boyfriend can stay there as long as he wishes, but ownership of the property will be the parents.

GoogleMeNow

Marcon said:

GoogleMeNow said:

Unfortunately, the daughter didn't take steps to ensure her wishes were carried out.  She had mentioned her expression of wishes verbally, but if she had written them down, we cannot find them.  It may be filed on her computer, but we haven't been able to access it.

Just to come back on this point...it may not be on her computer at all.

If nobody has yet done so, the starting point is to check with the employer (re DIS) and the pension provider (assuming this is some sort of group personal pension arrangement) whether they have her expression of wish forms. Completed and signed EOW forms are normally held by employers/trustees/pension providers

Both the employer and the pension provider have been informed of her death and are currently looking into it.  Not sure if they have an Expression of Wishes, but certainly it will be worth checking.

Marcon

GoogleMeNow said:

Marcon said:

GoogleMeNow said:

Savvy_Sue said:

GoogleMeNow said:

Keep_pedalling said:

Your husband’s parents do at least seem genuinely concerned about the partner, do you and your husband have a good relationship with him? 

Yes, we do have a good relationship with him.  We, as a family, are in agreement that he shouldn't be homeless. I think what has been the sticking point, is that the parents are changing their mind from day to day over whether to gift him the property entirely (which is the majority of the value of the estate), or whether to let him live there indefinitely as a tenant.  Don't believe they have discussed this with him yet.

Has anyone considered how they'd feel about him moving a new girlfriend in? Or asked if he WANTS to stay there? You said, I think, that there were ups and downs in the relationship, he may want to move on. 

These are all thoughts that I and husband have been considering.  Unfortunately, the parents haven't considered them and it is they who are administering the estate.  We are trying to advise them as best we can to make them think and consider the consequences of their actions, but the father is not very amenable to listening to anybody else's point of view. 

The boyfriend has already said that he doesn't know (yet) how he feels about living there.  At the moment it is still very raw and he is grieving, as are we all.

The mother had a stroke a couple of months ago and cannot concentrate or take in much of what we tell her. 

I started this thread to merely gather information with which to present to them for consideration. I am not trying to take the place of a legally qualified professional, just wanted them to think about the situation from a legal point of view and not make silly decisions which they might regret.

We have already advised that they pay a solicitor for some advice, but they believe all solicitors are only out for making money for themselves.  It is pointless trying to convince them otherwise.  

We are aware that there will still be a substantial inheritance to probably come to my husband in the future (barring all care home costs etc), but even people with substantial estates want to make good decisions regarding estate planning.

Indeed.

You started this thread by saying the daughter had died 'recently', so possibly just waiting a short while until some of the rawest edges of the grief have subsided a little might be no bad idea. That's going to leave the boyfriend in limbo, but as it's clear he isn't going to be thrown out on his ear, he might possibly appreciate the breathing space to consider how he feels?

Yes, we do need to allow time for us all to get to grips with it.  

The boyfriend does need some breathing space - he's not sure what they are offering him other than not to be made homeless.  One minute they are saying it's his house and therefore he should have it (no, it was their daughter's), next minute the boyfriend can stay there as long as he wishes, but ownership of the property will be the parents.

In your opening post you said: 'Obviously they want to save as much money from the tax man as they legitimately can' (relating to her parents).

Given that the daughter wasn't married and the property isn't going to a direct descendant (it has to be a 'lineal descendant' - you can't go 'up the chain' to parents), has anyone stopped to consider how the substantial amount of IHT is going to be paid on her estate if the property isn't sold?

GoogleMeNow

Aren't the daughter's parents 'lineal descendant's'?  I understand the boyfriend isn't but parents are thinking of owning the property and letting boyfriend live there rent free.

The IHT would be paid from the Death in Service benefit.

Marcon

GoogleMeNow said:

Aren't the daughter's parents 'lineal descendant's'?  I understand the boyfriend isn't but parents are thinking of owning the property and letting boyfriend live there rent free.

The IHT would be paid from the Death in Service benefit.

No. A descendant is someone who comes after you; parents come before.

The DIS can only be used to pay IHT if it is awarded to someone who is willing to use it for that purpose - and if it goes to the boyfriend, he may not be willing to do so. Given the value of the house, and adding in an unknown amount of savings, IHT could be well in excess of a quarter of a million.

Marcon

Link in case the stubborn father needs to be convinced: https://www.gov.uk/guidance/inheritance-tax-residence-nil-rate-band#direct-decs

Who is a direct descendent

For residence nil rate band purposes the direct descendant is:

• a child, grandchild or other lineal descendant
• a spouse or civil partner of a lineal descendant (including their widow, widower or surviving civil partner)

This also includes:

• a child who is, or was at any time, their step-child
• their adopted child
• a child fostered at any time by them
• a child where they’re appointed as a guardian or special guardian when the child is under 18

The person who inherits the home does not have to be under 18. A person’s step-child is only someone whose parent is, or was, the spouse or civil partner of that person.

Direct descendants do not include nephews, nieces, siblings and other relatives who are not included in the list above.

How would the IHT be paid if the daughter is found to have left a valid EOW form and has asked for the money to go to (say) a charity...?

GoogleMeNow

Marcon said:

How would the IHT be paid if the daughter is found to have left a valid EOW form and has asked for the money to go to (say) a charity...?

@Marcon thank you so much for your very useful advice.

  I think the parents were intending to gift the property to the boyfriend, but keep the DIS for their own 'needs'.  They seem willing to pay the IHT out of the DIS.....!I

If the EOW form says it goes to charity, it goes to charity and then I don't know how the IHT would be paid.

Marcon

GoogleMeNow said:

Marcon said:

How would the IHT be paid if the daughter is found to have left a valid EOW form and has asked for the money to go to (say) a charity...?

@Marcon thank you so much for your very useful advice.

  I think the parents were intending to gift the property to the boyfriend, but keep the DIS for their own 'needs'.  They seem willing to pay the IHT out of the DIS.....!I

If the EOW form says it goes to charity, it goes to charity and then I don't know how the IHT would be paid.

I twitch when I see the words 'gift the property to the boyfriend' - unless this is going to be done by deed of variation.  If they dither and miss the two-year deadline for doing that (and given her father knows everything and won't be taking advice from anyone, it's entirely possible) they could end up in a real mess - or rather, in even more of a mess than the one they are currently creating for themselves.

To understand why, you might want to have a look at this: https://www.litrg.org.uk/news/gifting-property-some-tax-points-consider

You say the parents are thinking of keeping the DIS for themselves, but the chances of the trustees awarding any of it - never mind all of it - to them given they have just inherited the whole of her estate, are pretty low, given there is a boyfriend in the mix who depended on her financially. There seem to be a lot of assumptions going on here, which aren't likely to be borne out in practice.

theoretica

Yes - if they give the property to the boyfriend (rather than a deed of variation) then their own estate may also need to pay inheritance tax on this gift (or more likely it will use up practically all their nil rate bands leaving IHT on their estate in full).  AND if they delay and the property rises in value between the daughter's death and the gift they will need to pay CGT on the increase in value.

GoogleMeNow

Marcon said:

GoogleMeNow said:

Marcon said:

How would the IHT be paid if the daughter is found to have left a valid EOW form and has asked for the money to go to (say) a charity...?

@Marcon thank you so much for your very useful advice.

  I think the parents were intending to gift the property to the boyfriend, but keep the DIS for their own 'needs'.  They seem willing to pay the IHT out of the DIS.....!I

If the EOW form says it goes to charity, it goes to charity and then I don't know how the IHT would be paid.

I twitch when I see the words 'gift the property to the boyfriend' - unless this is going to be done by deed of variation.  If they dither and miss the two-year deadline for doing that (and given her father knows everything and won't be taking advice from anyone, it's entirely possible) they could end up in a real mess - or rather, in even more of a mess than the one they are currently creating for themselves.

To understand why, you might want to have a look at this: https://www.litrg.org.uk/news/gifting-property-some-tax-points-consider

You say the parents are thinking of keeping the DIS for themselves, but the chances of the trustees awarding any of it - never mind all of it - to them given they have just inherited the whole of her estate, are pretty low, given there is a boyfriend in the mix who dependent on her financially. There seem to be a lot of assumptions going on here, which aren't likely to be borne out in practice.

Ok that's interesting.  I assumed that the rules of intestacy would mean that the parents (in the absence of spouse/civil partner and children) would inherit everything, which would include the DIS benefit.  The boyfriend was dependent on her financially in the sense that he lived in her property and didn't pay any rent or bills.  He does work full time but didn't own a property at the time he met the daughter.  I believe he was renting.  He has an ex wife and children but I know little about that part of his life.