Need advice about will and passing on estate to grandchildren

foxes_1945

Hello, I joined this forum to ask for some advice on wills.

My wife and I have ownership of our home with no debt. We both wish to leave our entire share (50% each) of our property to our 2 grandchildren. 

The property value is approximately £800K which will mean each grandchild will receive approximately £200K each from myself and another £200K each from my wife. So I was thinking about setting up a mirror will.

I wanted to place a restriction on the age at which they receive their share of the estate to 25 years, because I feel that 18 is too early. I have been told that the grandchildren will have to pay tax on their share when they reach the age of 25, whereas they pay no tax once they receive their share at 18 years. 

Can anyone help and advise what would be the simplest and most cost effective way for them to receive their share at 25 years old, without paying tax other fees?

Many thanks

FlorayG

I can't answer the tax question but I hope you understand that if you each leave your entire share to a third person then the survivor will most likely have to move out and the house be sold in order for the estate to pay out?
My parents avoided this by having mirror wills that said " I leave everything to my wife/husband and if they should predecease me then to X" so that everything would be passed on after the second parent died

Linton

Would it not be better to direct that the house be sold after both you and your wife have died and split the proceeds?  Amongst other things this would give more freedom to the survivor to find something possibly more appropriate after their spouse has died.

I believe that owning part of the house would lead to the children having to pay higher stamp duty when they come to buy their own houses, not being first time buyers.  Also owning part shares in a house can lead to rifts should one person want to sell and another not or on deciding who should pay for the up-keep.

p00hsticks

I think with an estate that size you really need to get professional advice,
Your individual shares are both over the current IHT allowance, whereas estates left to the deceased spouse are exempt from IHT. 
You also need to consider what happens to the survivor if half of the property is not going to be left to them, and if they want to remain living in the property the will needs to give them the right to stay and cover things liek who pays for the maintenance of the property, what happens if they want to downsize etc....

Usually far simpler to leave everything to the spouse and then to the children / grandchildren when the second spouse dies as FlarayG's parents did.

FlorayG

foxes_1945 said:

Hello, I joined this forum to ask for some advice on wills.

My wife and I have ownership of our home with no debt. We both wish to leave our entire share (50% each) of our property to our 2 grandchildren. 

The property value is approximately £800K which will mean each grandchild will receive approximately £200K each from myself and another £200K each from my wife. So I was thinking about setting up a mirror will.

I wanted to place a restriction on the age at which they receive their share of the estate to 25 years, because I feel that 18 is too early. I have been told that the grandchildren will have to pay tax on their share when they reach the age of 25, whereas they pay no tax once they receive their share at 18 years. 

Can anyone help and advise what would be the simplest and most cost effective way for them to receive their share at 25 years old, without paying tax other fees?

Many thanks

Are you leaving them the actual property or planning to have it sold and give them the proceeds? You're not clear, but I think you mean the proceeds in which case you really need to think about what will happen to whichever of you survives the other

RAS

There is capacity for all this to go very wrong and cost a lot of money.

Providing you are tenants in common, you can each leave your half to your grandchildren with a life interest trust permitting the survivor to live there. Otherwise where is the survivor to live? The grandchildren don't get the inheritance until the survivor dies.

Or you can set up a trust into which your assets are transferred. Some of these are onerous and the trustees can claim substantial fees and there are tax liabilities. 

You need a good STEP solicitor who can explain the difference between the options in a way you can understand and can ask the what if questions to ensure the survivor is not trapped in a situation that is costly and causes them problems if they need care.

Keep_pedalling

You both need to visit a solicitor to get advice and your wills sorted. Each of you can leave your share in a life interest trust with the surviving spouse having the right to live thereforthe rest of their life, and it would not pass to your GC until that time.

Preventing then inheriting until they are 25 is not easy as it will require a discretionary trust which is an expensive thing to mange and is subject to high levels of taxation. Leaving to a trust may also impact IHT as the residential  RRB may not be available.

How old are they now? Why do you want to skip a generation.

FlorayG

here's another thought - my grandad died when I was 6 years old, he left me £250. That would have almost been a deposit on a house then, but he stipulated I couldn't have it until I was 21, by which time it just about bought me an old second hand car