IHT, slightly complex situation

Keep_pedalling

Scottish_Dorset said:

Keep_pedalling said:

Scottish_Dorset said:

Keep_pedalling said:

To go off on tangent a bit, does her will take into to account that she may no longer own a house at the time of death which could disinherit her children and leave her grandchildren with everything? 

No, the property goes to her two children, grandchildren get cash gifts.

So what happens if she ends up in care and the house is sold to fund that care? Her children won’t have a house to inherit but there could still be plenty of cash for the GC to inherit. 

I can understand you Devil's Advocate point of view, however that is not what I am asking.  I am asking specifically about the IHT with a charge over a property and how this would be calculated.

I am not playing devils advocate, I am just pointing out that leaving a specific property in a will is bad practice which can have serious consequences to the beneficiaries of that bequest. People often get advice here not specifically related to the questions originally asked, we do it as it is often provides useful additional information on a potential problem they were not even aware of.

Sorry you have not got a definitive answer to your question but we don’t have sufficient information to do so.

Scottish_Dorset

Keep_pedalling said:

Scottish_Dorset said:

Keep_pedalling said:

Scottish_Dorset said:

Keep_pedalling said:

To go off on tangent a bit, does her will take into to account that she may no longer own a house at the time of death which could disinherit her children and leave her grandchildren with everything? 

No, the property goes to her two children, grandchildren get cash gifts.

So what happens if she ends up in care and the house is sold to fund that care? Her children won’t have a house to inherit but there could still be plenty of cash for the GC to inherit. 

I can understand you Devil's Advocate point of view, however that is not what I am asking.  I am asking specifically about the IHT with a charge over a property and how this would be calculated.

I am not playing devils advocate, I am just pointing out that leaving a specific property in a will is bad practice which can have serious consequences to the beneficiaries of that bequest. People often get advice here not specifically related to the questions originally asked, we do it as it is often provides useful additional information on a potential problem they were not even aware of.

Sorry you have not got a definitive answer to your question but we don’t have sufficient information to do so.

Thank you for your comment, I do appreciate everyone's help and comments.  In this instance I would like advice if I have the right understanding of the format for IHT in this case, using the assumption if the will came into effect today, for example.

1.  House is valued at £750K, house was built approximately 65 years ago by the family.  
2.  Cash valued at £50K.
3.  House to be split 50/50 between two brothers, direct descendants of MIL.
4.  Cash to be split between grandchildren
5.  House has a charge over it, 25% to MIL's ex-husband (deceased).  Arranged 35 years ago by court order on divorce and settled on death of MIL.  
6.  Ex-husband did not own any property on his death, lived with his new wife, the main beneficiary of his will.
7.  Question:  IHT due on 75% value of house plus £50K cash, less allowances of £500K ( personal allowance £325K and allowance passing on to direct descendants £175K).  Is this correct?
8.  Question:  Can the 25% valuation due to ex-husband's estate be reduced by some of costs MIL has paid to maintain and upkeep the property, such as new roof etc.  Ex-husband did not contribute towards MIL or house once divorced.
9.  Question:  Will ex-husband's new wife have to pay CGT on the lump she will receive or will this come within the scope of ex-husband's IHT personal allowance.  When he died his assets (not including this 25% were valued at £160K.

I know this a reasonably complex situation and I hope I have described okay.  We may well have to take professional advice when the time comes but looking to see if we are on the right format at least.

Many thanks everyone!

Keep_pedalling

Scottish_Dorset said:

Keep_pedalling said:

Scottish_Dorset said:

Keep_pedalling said:

Scottish_Dorset said:

Keep_pedalling said:

To go off on tangent a bit, does her will take into to account that she may no longer own a house at the time of death which could disinherit her children and leave her grandchildren with everything? 

No, the property goes to her two children, grandchildren get cash gifts.

So what happens if she ends up in care and the house is sold to fund that care? Her children won’t have a house to inherit but there could still be plenty of cash for the GC to inherit. 

I can understand you Devil's Advocate point of view, however that is not what I am asking.  I am asking specifically about the IHT with a charge over a property and how this would be calculated.

I am not playing devils advocate, I am just pointing out that leaving a specific property in a will is bad practice which can have serious consequences to the beneficiaries of that bequest. People often get advice here not specifically related to the questions originally asked, we do it as it is often provides useful additional information on a potential problem they were not even aware of.

Sorry you have not got a definitive answer to your question but we don’t have sufficient information to do so.

Thank you for your comment, I do appreciate everyone's help and comments.  In this instance I would like advice if I have the right understanding of the format for IHT in this case, using the assumption if the will came into effect today, for example.

1.  House is valued at £750K, house was built approximately 65 years ago by the family.  
2.  Cash valued at £50K.
3.  House to be split 50/50 between two brothers, direct descendants of MIL.
4.  Cash to be split between grandchildren
5.  House has a charge over it, 25% to MIL's ex-husband (deceased).  Arranged 35 years ago by court order on divorce and settled on death of MIL.  
6.  Ex-husband did not own any property on his death, lived with his new wife, the main beneficiary of his will.
7.  Question:  IHT due on 75% value of house plus £50K cash, less allowances of £500K ( personal allowance £325K and allowance passing on to direct descendants £175K).  Is this correct?
8.  Question:  Can the 25% valuation due to ex-husband's estate be reduced by some of costs MIL has paid to maintain and upkeep the property, such as new roof etc.  Ex-husband did not contribute towards MIL or house once divorced.
9.  Question:  Will ex-husband's new wife have to pay CGT on the lump she will receive or will this come within the scope of ex-husband's IHT personal allowance.  When he died his assets (not including this 25% were valued at £160K.

I know this a reasonably complex situation and I hope I have described okay.  We may well have to take professional advice when the time comes but looking to see if we are on the right format at least.

Many thanks everyone!

The charge on the house would be a debt owed by your mother’s estate so it does reduce the value of her estate and no IHT would be payable on that debt.

As the wife of the ex does not own any part of the house she will not pay CGT on it. 

Scottish_Dorset

Keep_pedalling said:

Scottish_Dorset said:

Keep_pedalling said:

Scottish_Dorset said:

Keep_pedalling said:

Scottish_Dorset said:

Keep_pedalling said:

To go off on tangent a bit, does her will take into to account that she may no longer own a house at the time of death which could disinherit her children and leave her grandchildren with everything? 

No, the property goes to her two children, grandchildren get cash gifts.

So what happens if she ends up in care and the house is sold to fund that care? Her children won’t have a house to inherit but there could still be plenty of cash for the GC to inherit. 

I can understand you Devil's Advocate point of view, however that is not what I am asking.  I am asking specifically about the IHT with a charge over a property and how this would be calculated.

I am not playing devils advocate, I am just pointing out that leaving a specific property in a will is bad practice which can have serious consequences to the beneficiaries of that bequest. People often get advice here not specifically related to the questions originally asked, we do it as it is often provides useful additional information on a potential problem they were not even aware of.

Sorry you have not got a definitive answer to your question but we don’t have sufficient information to do so.

Thank you for your comment, I do appreciate everyone's help and comments.  In this instance I would like advice if I have the right understanding of the format for IHT in this case, using the assumption if the will came into effect today, for example.

1.  House is valued at £750K, house was built approximately 65 years ago by the family.  
2.  Cash valued at £50K.
3.  House to be split 50/50 between two brothers, direct descendants of MIL.
4.  Cash to be split between grandchildren
5.  House has a charge over it, 25% to MIL's ex-husband (deceased).  Arranged 35 years ago by court order on divorce and settled on death of MIL.  
6.  Ex-husband did not own any property on his death, lived with his new wife, the main beneficiary of his will.
7.  Question:  IHT due on 75% value of house plus £50K cash, less allowances of £500K ( personal allowance £325K and allowance passing on to direct descendants £175K).  Is this correct?
8.  Question:  Can the 25% valuation due to ex-husband's estate be reduced by some of costs MIL has paid to maintain and upkeep the property, such as new roof etc.  Ex-husband did not contribute towards MIL or house once divorced.
9.  Question:  Will ex-husband's new wife have to pay CGT on the lump she will receive or will this come within the scope of ex-husband's IHT personal allowance.  When he died his assets (not including this 25% were valued at £160K.

I know this a reasonably complex situation and I hope I have described okay.  We may well have to take professional advice when the time comes but looking to see if we are on the right format at least.

Many thanks everyone!

The charge on the house would be a debt owed by your mother’s estate so it does reduce the value of her estate and no IHT would be payable on that debt.

As the wife of the ex does not own any part of the house she will not pay CGT on it. 

Thanks for that, that is helpful.  Would MIL be able to reduce the 25% value due to the work she has done on the house over the years?  The judge ordered the split this way as MIL was nursing her own MIL in the house and did so for the next 10 years.