Giving sibling their 'inheritance' and IHT

sclare

My parent died leaving no inheritance, due to care fees. The only thing left was a rental property that she and I owned as joint tenants and which reverted to me by survivorship. My sibling has nothing. 

At the moment the future of the property is complicated due to care debt (which is a whole other story) but ignoring that for now, in a best case scenario, if I sell the house and get to keep the proceeds, I'd want to share them with my sibling. It only seems fair. But as this property takes my capital over the inheritance tax limit, if I die within seven years there'll be inheritance tax to pay on what I give my sibling. 

How can I mitigate this problem? I don't want my children to have to pay tax on the gift to my sibling. What should do? Is there any kind of loophole for this situation?

elsien

The estate wouldn’t have been emptied because of care fees. The local authority takes over full funding once the person’s assets go down to 14 1/2 K, And payments are only on a sliding scale between that and 23 1/2 K. So there should have been something left? 

Unless there was a deferred payment charge on her half of the rental property?

ETA I can see you have a previous thread on this which asks similar questions. Were they not answered then? 

https://forums.moneysavingexpert.com/discussion/6549681/inheritance-tax-and-jointly-owned-property-sold-to-pay-care-debt/p1

lisyloo

I don't know of a loophole, but you could certainly make provision with a life assurance policy.

Keep_pedalling

You you sure you are over the limit? Do you own a home? If so have you taken the residential NRB into account? What is your marital status?

If you are healthy, term life insurance to cover failed PETs is a cheap option and one we have used over the years. 

sclare

If I receive the full proceeds of the property (which at this point I don't expect I will) yes, I'm definitely over. I'm widowed and own a four bed house in the south east, and taking in account some relatively recent cash gifts when my children bought their homes, this second property will take me over the total for the three different allowances, mine, my late husband's and the house I live in (left to my children)

sclare

@elsien I'd like to keep this particular thread to the IHT issue, or everything tends to get muddied! I now have a lawyer dealing with the other situation, so have head space to consider possible future issues.