Accidental landlord - first steps

Keep_pedalling

Was she married to her partner? If not you could be looking at a IHT liability as well as the RNRD is not available to the estate. 

se2020

Keep_pedalling said:

With a private arrangement there is a good chance that the correct procedures may not have been carried out such a protecting the tenants deposit  so it is likely you may need to take professional advice. 

I have found details of the deposit protection scheme, I've not been through much of it yet but everything so far appears to be in order.

RAS

The bigger issue is that until the tenants are formally advised of the name of the new landlord, where to pay rent and who to contact for repairs and notice, no rent is due.

It looks as if the rent is to be paid to the partner? In which case they stand up, or as a fudge, you advise the LL is the estate of mum? Even if there is a further notice when probate is granted.

se2020

RAS said:

The bigger issue is that until the tenants are formally advised of the name of the new landlord, where to pay rent and who to contact for repairs and notice, no rent is due.

It looks as if the rent is to be paid to the partner? In which case they stand up, or as a fudge, you advise the LL is the estate of mum? Even if there is a further notice when probate is granted.

Currently the rent is paid directly from the dwp so I don't know if it is them we need to notify or the tenant. 

The rent does get paid to the partner although that's a provision from the will. Does that automatically make them the landlord just because they will take the income from  the rent?

Effectively is,  the 'estate of mum' the same thing as 'mum'?
Ie, do we actually need to change/do anything at this stage while the 'estate' still exists?

What if nobody wants to accept the role of landlord?

Keep_pedalling

se2020 said:

RAS said:

The bigger issue is that until the tenants are formally advised of the name of the new landlord, where to pay rent and who to contact for repairs and notice, no rent is due.

It looks as if the rent is to be paid to the partner? In which case they stand up, or as a fudge, you advise the LL is the estate of mum? Even if there is a further notice when probate is granted.

Currently the rent is paid directly from the dwp so I don't know if it is them we need to notify or the tenant. 

The rent does get paid to the partner although that's a provision from the will. Does that automatically make them the landlord just because they will take the income from  the rent?

Effectively is,  the 'estate of mum' the same thing as 'mum'?
Ie, do we actually need to change/do anything at this stage while the 'estate' still exists?

What if nobody wants to accept the role of landlord?

If the will gives him the income from the rental then both flats are held within the trust and he is the beneficial owner of both. An IPDI trust that covers just a main residence is very straight forward, but one that also has an asset that generates income is more complex. I believe the trust will be the landlord rather than the beneficiary, so I think taking professional advice is going to be a must for the trustees.

What is the value of the two flats? Was your mother married to her partner? If not was she widowed from your father?

If they were not married then there is no IHT spousal exemption and because the main residence is not being left directly to her children the residential NRB is also not available so the immediate problem might be how to pay an IHT liability. 

se2020

Keep_pedalling said:

se2020 said:

RAS said:

The bigger issue is that until the tenants are formally advised of the name of the new landlord, where to pay rent and who to contact for repairs and notice, no rent is due.

It looks as if the rent is to be paid to the partner? In which case they stand up, or as a fudge, you advise the LL is the estate of mum? Even if there is a further notice when probate is granted.

Currently the rent is paid directly from the dwp so I don't know if it is them we need to notify or the tenant. 

The rent does get paid to the partner although that's a provision from the will. Does that automatically make them the landlord just because they will take the income from  the rent?

Effectively is,  the 'estate of mum' the same thing as 'mum'?
Ie, do we actually need to change/do anything at this stage while the 'estate' still exists?

What if nobody wants to accept the role of landlord?

If the will gives him the income from the rental then both flats are held within the trust and he is the beneficial owner of both. An IPDI trust that covers just a main residence is very straight forward, but one that also has an asset that generates income is more complex. I believe the trust will be the landlord rather than the beneficiary, so I think taking professional advice is going to be a must for the trustees.

What is the value of the two flats? Was your mother married to her partner? If not was she widowed from your father?

If they were not married then there is no IHT spousal exemption and because the main residence is not being left directly to her children the residential NRB is also not available so the immediate problem might be how to pay an IHT liability. 

I am not sure of the value, zoopla shows the property as £550 although it is showing it as a single dwelling. It was divided into 2 seperate flats years ago, both with seperate addresses,  council tax bills etc. I think it's still on one freehold title although I'll have to check this.
Mum originally owned the whole property and converted it when the mortgage was paid off.

Not married to partner. No civil partnership or anything. Have been living together for 25yrs or so.
Divorced from father about 30yrs ago. 
Father is still alive (and has remarried)

I do not yet know the value of any assets/cash left in the estate.
Is IHT due on the total value of the estate at the time of death?
Or, if there is enough cash in the estate,  is IHT only due on what's left after paying funeral expenses,  any necessary house repairs, any outstanding debts, and paying the IHT itself?

se2020

Say the property is valued at £550 and there is £100 cash (after funeral costs etc)
Total value £650 less £325 = £325
Is IHT due on £325 or can the IHT be paid from the estate first?

So, if £325×40% is due (£130) does that £130 reduce the taxable value of the estate to £195 meaning IHT due of £78?

Obviously not correct numbers but hopefully it explains my question!

Keep_pedalling

se2020 said:

Say the property is valued at £550 and there is £100 cash (after funeral costs etc)
Total value £650 less £325 = £325
Is IHT due on £325 or can the IHT be paid from the estate first?

So, if £325×40% is due (£130) does that £130 reduce the taxable value of the estate to £195 meaning IHT due of £78?

Obviously not correct numbers but hopefully it explains my question!

For an estate with £650k of assets and only one NRB then £325k will be subject to IHT @ 40% so £130k and with only £100k in liquid assets that is obviously a problem. 

The problem also has a knock on effect on his estate because as beneficial owner, the whole lot forms part of his estate for IHT purposes

Had they been married or civil partners an IPDI trust would normally be a perfect solution, but that is not always the case with unmarried couples. 

Is her partner financially dependant on this trust or does he have sufficient assets of his own that he could use to support himself? If he is in a position to make a deed of variation that gives ownership of the flat they lived in to her children then the estate will have access to the RNRB then the IHT liability for both estates could be reduced substancially.