Will and House Gift to Sons?

Nobber_2

hello

My mother have signed over her house to myself and my brother about 8 years ago, she is still going strong(thank God) and living in it but I was wondering what the tax sitiuation was, will this be treated as an inheritance, the house is worth about £200k.

Also my brother doesn't have a will, if he dies where does his half of the house go? he has a ex wife from 15 years ago and two children

Thanks

Nobber

chopperharris

see a lawyer , law is different depending in the part of the uk you are from and other fine details matter too....like exacting proof of ownership , living in , ie title deeds.

theres a timespan also for gifting property before death before iht iirc , so you might want to also see a specialist on that to get that in writing.You also have "going into care" , where homes can be sold to pay for it....its alot harder with a family member registered as owner or even staying there.

youll get many different answers on here , so rely on paid information from professionals.It will be money well spent.

seven-day-weekend

If your house is worth £200k then it is below the threshold for Inheritance Tax.

As to your brothere's lack of a will, here are the rules of Intestacy taken from this website http://www.lawontheweb.co.uk/basics/wills.htm

Dying without leaving a Will (intestate) - Who gets what?
- The Intestacy Rules
If you die without leaving a valid Will then the law decides who gets what. It does not matter what you may have wished for or promised while you were alive. If there is no valid Will then who gets what is determined by the Intestacy Rules. Here is a guide to what would happen.
If you have a lawful spouse (ie you are legally married)
If your estate is worth less than £125,000 then your spouse gets everything.
If your estate is worth more than £125,000 and you had no other surviving relative (eg children, grandchildren, parents), then your spouse will still get everything.
If you have a lawful spouse, plus children
If your estate is worth less than £125,000 then your spouse gets everything. If your estate is worth more than £125,000 then your spouse would get £125,000 and a life interest (ie the right to take interest on the remainder, but not the capital itself) in half of anything over this sum. Your children would get half the sum over £125,000 immediately and be entitled to the other half on the death of your spouse. Should any of your children die before you then their children would be entitled to take their parent's share.
If you have a lawful spouse, no children, but parents/brothers/sisters/ grandparents/aunts/uncles
If your estate is worth less than £200,000 then your spouse gets everything. If your estate is worth more than £200,000 then your spouse would get £200,000, plus half the balance. The remaining half goes to the other relatives in this order of priority - parents; brothers/sisters; half brothers/sisters; grandparents; aunts/uncles; spouses of aunts/uncles.
If you are not lawfully married, but have had children
Your estate will be shared between the children. Should they die before you then their children would take their share.
If you are not lawfully married, have no children, but have parents or have had brothers/sisters/grandparents/aunts/uncles
Your estate will be shared equally amongst them in this order of priority - parents; brothers/sisters; half brothers/sisters; grandparents; aunts/uncles; spouses of aunts/uncles. If any of these have predeceased, but have living children then the children will take their parent's share.
If you are not lawfully married, and have no other relatives
Your estate will go the Crown
It should be noted that these rules on intestacy do not recognise "common law" partners, and that "children" includes natural, adopted and illegitimate children, but excludes step-children. The figures are correct as at January 2007, but are subject to change.

I agree with the above poster, get professional help to be sure.

CLAPTON

if you and your brother legally own the house then you will be subject to capital gains tax based on the increase in value from the time of acquisition (8 years ago) and the sale price.

dunstonh

The gift, if it sounds like it has been done as it has (mother still living there) is a very inefficient way to avoid tax and indeed will create a capital gains tax bill where one didnt exist before. Had it not been gifted, there would be no IHT bill on the assumption the estate is below the IHT threshold and no CGT bill.

Nobber_2

Thank you for the replies, my brother has been allowed to see his two children for over 15 years, presumably thats irrelavant...? they will still be entitled to his share

Nobber_2

sorry one other thing, the house was gifted because we were worried about my mums health and didn't want to lose the lot to nursing bills

dunstonh

Nobber wrote: »

sorry one other thing, the house was gifted because we were worried about my mums health and didn't want to lose the lot to nursing bills

Doesnt make any difference. Once the local authority find out she has been living in the house she gifted rent free they will almost certainly treat it as deprivation of assets and start proceedings against you.

You havent avoided inheritance tax as its a gift with reservation. You havent avoided local authority means test taking it into account as its an obvious case of deprivation of assets and you have created a capital gains tax bill of £32,000 where none existed before.

There are ways to do these things correctly but you havent. You are not alone. Many people think they are doing something which the Govt havent thought of and will save them money but in the end it just costs you more than had you left it alone or done the transactions correctly, as in your case.

CLAPTON

if your brother is legally divorced and has not remarried then his sons are his legal heirs and will inherit his share of the property if he makes no will.... if this is a problem then why doesn't he make a will?

seven-day-weekend

dunstonh, apparently the house is below the IT threshold, so they won't have to pay this?

dorry_2

this might be usefull, read right through to the end, the bit about if the person was fit and healthy when you were given the home, they may not be use the deorivation of assests against you

http://www.housingcare.org/information/detail-2338-deprivation-of-assets.aspx

I would get legal advice now and ask a solictor what to do, you may have to get a statement of someone saying she is fit and healthy at present??

hth