Inheritance issues

jeanella

I am not sure whether I need a Financial Consultant. My husband is reluctant so I am asking here. We are a 79 yo couple with fairly substantial assets (mostly in our home but some invested) . Fairly low income.  18 months ago I inherited quarter of my mother’s house which my sister is currently occupying and which since my father’s death some years ago I had owned a quarter. So now half the house is mine. The house is valued around £400K. We have four children and would like to pass on some of this sooner rather than later (7 year rule). My sister has been living FOC in the house for about 20 years. She had a house abroad but the money from the sale is still over there. I want to find a way to liquidate the house share and pass some in to our family to avoid inheritance tax down the line but without making my sis leave the house. Has anyone any ideas on this? Is it possible to sell a share of the house to my sis? I don’t think she could afford the whole amount. 

Keep_pedalling

You could pass your inheritance to your children via a deed of variation which means it does not form part of your estate. You really should put some pressure on your sister to either buy out the 50% she does not own or put the place up foe sale and distribute the assets, she has been freeloading for far too long long.

sheramber

Who owns the other 50% of the house?

She can buy your 50% from you  or a lesser % if you wanted. 

Yorkie1

Keep_pedalling said:

You could pass your inheritance to your children via a deed of variation which means it does not form part of your estate. You really should put some pressure on your sister to either buy out the 50% she does not own or put the place up foe sale and distribute the assets, she has been freeloading for far too long long.

Am I right in thinking that:

• any DoV needs to be done within 2 years of death?
• Doing a DoV to the children could cause them issues with Capital Gains Tax, second home SDLT, and/or First Time Buyer mortgage discounts in the future, so not to be done without thinking it through?

jeanella

Thank you - I have now discovered that SDLT will be payable should any of the children buy and move to another home. This could be substantial in some of their cases so I am not going ahead with the variation. Still wanting a solution though! 

silvercar

You have another 6 months to do a deed of variation, to pass anything you can to your children that you have inherited via a Deed of a variation.

As for the house, your sister should be paying you rent, having lived in it with you being a part owner. She either needs to buy you out or pay you rent or agree to a sale. 

madbadrob

You could sell a share of your share in the house to your sister if she would be willing to buy it.  This would liquidate some of the money for you to pass on to family however remember should you need a care home in the future the assets from this share etc could be used to decide whether you would need to pay for your care (of course we all hpoe we dont need to go into a home)   I am not sure a DOV is necesssary here and would place a bigger tax burden on your children in the future.  The issue of selling your share to anyone but your sister would be that they could force her to sell at worst or make her pay that share of market rent to continue to live there.  I am assuming you wouldnt want that either.

The only other option is basically keep the Status Quo

Rob

Keep_pedalling

jeanella said:

Thank you - I have now discovered that SDLT will be payable should any of the children buy and move to another home. This could be substantial in some of their cases so I am not going ahead with the variation. Still wanting a solution though! 

That will only be the case if you transfer ownership of the house, the only solution is to get the house sold, either to your sister or on the open market, you really need to be tough with her. If she won’t cooperate then you should give her notice that you will be taking legal action to force a sale if she refuses to cooperate. 

Sea_Shell

Always a tricky conundrum when one beneficiary resides in the property and one doesn't.   

No easy solutions, other than they buy out your 50%, or the house is sold and you both get 50% of the cash.

I can see myself ending up in your shoes, if the cards fall in a certain way.  

Although, I would be wanting to pass my share onto my Niblings (who may also be resident)



ETA - I had asked similar in a thread, but I've just looked at it and all the replies have been removed, or aren't showing for me (glitch?)   I seem to recall having some interesting replies. 

Maybe you will be able to see the replies, even if I can't, so here's the link...

 https://forums.moneysavingexpert.com/discussion/6586974/using-deed-of-variation-question

Keep_pedalling

Sea_Shell said:

Always a tricky conundrum when one beneficiary resides in the property and one doesn't.   

No easy solutions, other than they buy out your 50%, or the house is sold and you both get 50% of the cash.

I can see myself ending up in your shoes, if the cards fall in a certain way.  

Although, I would be wanting to pass my share onto my Niblings (who may also be resident)



ETA - I had asked similar in a thread, but I've just looked at it and all the replies have been removed, or aren't showing for me (glitch?)   I seem to recall having some interesting replies. 

Maybe you will be able to see the replies, even if I can't, so here's the link...

 https://forums.moneysavingexpert.com/discussion/6586974/using-deed-of-variation-question

Looks like whoever replied to you on that thread has been banned and their posts removed.