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Advice needed on Inheritance / estate planning before i see an FA

Hi - I am going to see an adviser but before I did just wanted to get some impartial advice on here.  Its to be with my father's estate and not mine.  
My old man is 80 - still working (not out of need but because he enjoys it and wants to keep his mind ticking over) - he runs his own business which my brother is a partner in. My mum is still alive and kicking as well.

Anyway was speaking to him today and death came up in the conversation and I was surprised that he has no provision in place regarding his estate after he goes.  What surprised me more was the size of his estate.  His assumption was that between the 4 siblings we would just sort it all out and share amongst us !!!  So given his estate below, what steps should he take - I did say I would look into it for him, especially as my partner and I had our wills done recently.  Their estate consists of:
  1. About £400k in cash in various bank accounts
  2. My mum has around £90k in cash
  3. House worth around £450k
  4. Investment property worth around £200k - in his, my mums and my sisters name
  5. Business with my brother down as partner
No debts

So where would I start with this one?  Any advice much appreciated 
«1

Comments

  • Well the starting point is does he and your mother have wills and lasting powers of attorney in place? If not that should be a top priority and a solicitor should be the first port of call not a financial advisor.

    Is the marital home in his name alone? 
  • Savvy_Sue
    Savvy_Sue Posts: 46,902 Forumite
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    And another priority should be establishing what happens to the business after either his or your brother's death! Is it set up in such a way that it can continue 'business as usual', or will access to the bank account etc be a problem?
    Signature removed for peace of mind
  • bobster2
    bobster2 Posts: 785 Forumite
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    Are your mum and dad married? And do they own their main home as joint tenants?
  • tacpot12
    tacpot12 Posts: 9,017 Forumite
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    This article provides some food for thought about the partnership, and what can be done to prepare for the partnership ending: Death and the family partnership - Parklane Plowden

    As far as I understand IHT, and I'm not an expert, the main issue you have is that there is an imbalance between the cash that your father has and what your mother has. My understanding is that with the current situation, your father will not have any unused IHT allowance when he dies (the cash uses it all up), so if he dies before your Mum, she cannot inherit this unsed allowance. If he were to give some cash to her so that they both had roughly the same amount of cash, if he were to die before her, she might inherit a small amount of IHT allowance which would reduce the IHT bill. Whether or not there would be any unsed IHT allowance depends on the value of the properties and the business when he passed and whether they give you any money before they pass (plus there might be a change in the IHT allowance, but I don't think this is likely). 

    He and she can both give away money to you now. If one of them gives away more than £3000 in a year, this becomes a potentially exempt transfer, i.e.IHT might be payable on it, if they don't live for 7 years.

    It would be worth them taking some professional advice and creating two plans for what will happen with each aspect of their estates - one plan for if your father were to die first and one for if your mother were to die first. You will need to ensure that they are happy to discuss this with a professional, and that everyone agrees with the plan. These plans might alter their wills, so I think that they need to talk to a professional estate planner first and then revise the Wills. 

    Putting a PoA in place is much easier and so I would try to get these done asap. The Partnership agreement should be extended to include what happens if a partner is incapacitated, so that the business can continue.
    The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.
  • Keep_pedalling
    Keep_pedalling Posts: 19,280 Forumite
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    Sorry for so many questions but here are some more

    If he died first why would he want his estate to be split between his children rather than the bulk go to your mother? Apart from being unfair it would miss out on spousal exemption leading to a substantial IHT liability.

    Does he and your mother have nothing in pensions or ISAs?
  • FlorayG
    FlorayG Posts: 1,567 Forumite
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    From you father's point of view he just needs to write a will; what he leaves to your mother and to the children as he wants to. After that it's down to his executors to sort things out, so it's not clear what you want a financial advisor for?
    For the business I don't know what the death of a partner would entail
  • bobster2
    bobster2 Posts: 785 Forumite
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    tacpot12 said:

    As far as I understand IHT, and I'm not an expert, the main issue you have is that there is an imbalance between the cash that your father has and what your mother has. My understanding is that with the current situation, your father will not have any unused IHT allowance when he dies (the cash uses it all up), so if he dies before your Mum, she cannot inherit this unsed allowance. 
    If they are married and he leaves all this cash to his wife then it does not use up his NRB allowance. And his unused NRB could then be available to her estate.
  • Keep_pedalling
    Keep_pedalling Posts: 19,280 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper Photogenic
    bobster2 said:
    tacpot12 said:

    As far as I understand IHT, and I'm not an expert, the main issue you have is that there is an imbalance between the cash that your father has and what your mother has. My understanding is that with the current situation, your father will not have any unused IHT allowance when he dies (the cash uses it all up), so if he dies before your Mum, she cannot inherit this unsed allowance. 
    If they are married and he leaves all this cash to his wife then it does not use up his NRB allowance. And his unused NRB could then be available to her estate.
    Trouble is at the moment he does not seem to have a will and wants his estate divided between his children. If he sticks to that and makes a will it will be worse than dying intestate as far as His wife and IHT are concerned. 
  • RAS
    RAS Posts: 34,446 Forumite
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    edited 4 December 2024 at 10:10AM
    aj9648 said:
    My old man is 80 - still working (not out of need but because he enjoys it and wants to keep his mind ticking over) - he runs his own business which my brother is a partner in. My mum is still alive and kicking as well.

    His assumption was that between the 4 siblings we would just sort it all out and share amongst us !!!  So given his estate below,...... Their estate consists of:
    1. About £400k in cash in various bank are all these in his name only? Any of these associated with the business rather than personal?
    2. My mum has around £90k in cash - ditto (her)?
    3. House worth around £450k is this owned by him, a joint tenancy or tenants in common?
    4. Investment property worth around £200k - in his, my mums and my sisters name - ditto how is this owned, in what proportions if it is a tenancy in common?
    5. Business with my brother down as partner - this needs advice as to how it's owned (partnership? Limited company?) and the consequences of that situation, and informed discussion with your brother as to whether he wants to continue the business.
    6. Any pensions?
    First thing is to get POAs organised. These do not need legal advice normally, but he and brother need to speak to someone about the business. It's going to be really important that both parents have something in place, and that your father's enables your brother to continue the business without dad, if that's what they both want.  These are urgent and can be done on-line for a small fee.

    tacpot and K_P make important points about the tension between dad's aspirations and the possible legal and financial implications for them and their mum.

    Simultaneously, clarify ownership of the other elements as above, you can get basic details of the property ownership from the Land Registry. Initial cost £3 for each property. 

    Note that property and account ownership is not immutable at this stage, but he needs advice, and to talk seriously with your mum, business brother and owning sister.

    A good STEP solicitor can ask a lot of "what if" questions, but it may be harder to find one who can also advise on small business as well.

    One basic your dad needs to understand is that anything jointly owned can go to the survivor(s) if it's organised and could be outside the estate.

    He also needs to understand that transfer between spouses do not attract IHT, so leaving everything to the children rather than mum would lead to an unnecessary IHT bill.

    And that in some instances he can leave his portion to the children (individually or jointly), and  mum can benefit during her life, avoiding some of the IHT.

    From a personal point of view, I'd suggest that once you've confirmed the ownership, those elements where your siblings have some element of ownership are discussed between dad and the relevant sibling (and mum re 4), rather than yourself. Last thing you all need is dad making decisions about stuff your siblings and mum part own without discussing with them.

    Obviously the estate needs to be considered as a whole but the mix of family ownership means that elements may be handled differently, depending on the current and future ownership details.

    Once you've understand the ownership, come back for further comment?
    If you've have not made a mistake, you've made nothing
  • aj9648
    aj9648 Posts: 1,382 Forumite
    Part of the Furniture 500 Posts
    Well the starting point is does he and your mother have wills and lasting powers of attorney in place? If not that should be a top priority and a solicitor should be the first port of call not a financial advisor.

    Is the marital home in his name alone? 
    There are no wills and that the prioroity to get that sorted
    The marital home is in his name alone
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