Hi Huskaris. Thanks for the kind words. Sadly, no, the house is not being left to me solely because his partner wants security of being able to stay in the house that putting it in joint names and stating her right to live there within the will gives her. Sadly, that means us losing the £70k financial benefit we would have had by the house being left to me.
Are you sure about that? I am not saying you are wrong, but I would say that if you are 50% owner, than you should be due at least £35k of the financial benefit.
I know it is absolutely... Strange... But have they considered getting married...? It really is not as rare as you might think...
There is normally no tax to be paid if you leave everything above the threshold to a spouse or civil partner.
Could your father not now "gift" you £325k. This could be the gift from 2019, plus the joint account funds, plus some of his current cash, and then give everything else to his partner, were they to marry, tax free.
Again, I know it is... Difficult, but I just thought I would put it out there. I am sorry if this is insensitive in any way.
This is going to be a very complicated estate, do you really mean he's left half the house to each of you and she has a right to live there? i.e. she is actually inheriting half and you half? Is this just in the will or is there a legal agreement? Does she have the right to leave her half to someone/anyone she chooses?
If the right to live there is a legal agreement for the partner the nil rate band for housing may not apply as you in effect have the property held in trust but it does depend on the type of trust, if you have absolute interest or interest in possession etc.
From what we know I think you are right with;
£976k less £325k allowance = £651k @ 40% = £264k
The estate as above would split as follows;
£976k - Estate £264k - IHT to pay £30k - to Partner £350k - House Value
Remaining to be distributed 50/50 with you and your fathers partner £332k = £166k each.
You really need to see a Lawyer and probably a IHT specialist accountant ASAP. Appreciate what your dad is trying to do but he's pretty much doing it in the least efficient way for all concerned.
Inheritance Tax advice please on the following scenario:
1. My dad funded the £76,000 purchase of a property abroad in 2010 that was registered in our joint names. 2. In 2011, for convenience purposes, the property was transferred into my sole name. Effectively, he ‘gifted’ me the property abroad when he removed his name from the title deeds 3. I sold the property for £90000 in 2014.
4. I paid dad back £85,000 representing his funds and a share of the profit 5. In 2019 dad ‘gifted me’ £215k
Dad’s not well now and may not make it. The implications of this and other assets held means that we will be liable for 40% inheritance tax on the £215k gift.
So...................I am thinking that maybe I could argue with the tax man that the £85k I paid dad was an interest free loan and that he, effectively repaid me as part of the £215k he gave me in 2019. On the basis that the asset sold was in my sole name, do you think that would be a reasonable story to justify excluding £85k from the £215k when calculating what is and isn’t subject to inheritance tax?
What do you guys ‘in the know’ think of my chances of winning that argument with HMRC?.
First thing I will ask is have you spoken to a solicitor yet ? I remember your post from 2 weeks ago & @Rob7Lee gave you some very helpful advice then. I think you have greater problems than tax on the "gift" if your dads partner still has access to his £170k.
As for the "gift" itself. I don't think you'll get anywhere with HMRC over the return of the loan to your father a few years ago. Did you pay tax on the property gain, if not then you might have more to lose on all this & as @Rob7Lee points out, they will certainly look into ALL aspects of the payments between you & your father over the past 10 years.
Inheritance Tax advice please on the following scenario:
1. My dad funded the £76,000 purchase of a property abroad in 2010 that was registered in our joint names. 2. In 2011, for convenience purposes, the property was transferred into my sole name. Effectively, he ‘gifted’ me the property abroad when he removed his name from the title deeds 3. I sold the property for £90000 in 2014.
4. I paid dad back £85,000 representing his funds and a share of the profit 5. In 2019 dad ‘gifted me’ £215k
Dad’s not well now and may not make it. The implications of this and other assets held means that we will be liable for 40% inheritance tax on the £215k gift.
So...................I am thinking that maybe I could argue with the tax man that the £85k I paid dad was an interest free loan and that he, effectively repaid me as part of the £215k he gave me in 2019. On the basis that the asset sold was in my sole name, do you think that would be a reasonable story to justify excluding £85k from the £215k when calculating what is and isn’t subject to inheritance tax?
What do you guys ‘in the know’ think of my chances of winning that argument with HMRC?.
First thing I will ask is have you spoken to a solicitor yet ? I remember your post from 2 weeks ago & @Rob7Lee gave you some very helpful advice then. I think you have greater problems than tax on the "gift" if your dads partner still has access to his £170k.
As for the "gift" itself. I don't think you'll get anywhere with HMRC over the return of the loan to your father a few years ago. Did you pay tax on the property gain, if not then you might have more to lose on all this & as @Rob7Lee points out, they will certainly look into ALL aspects of the payments between you & your father over the past 10 years.
Hi Golfie. Well, since my last post, I haven’t spoken to a solicitor yet but I have found out that dad has just rewritten his will and I’ve found out more about the exact value and whereabouts of dad’s assets which is as follows:
1. £82k held in a joint account with dad and me 2. £236k held in joint names with dad and his partner 3. £38k held in dads sole name 4. Dad has £25k in PSBs and shares 5. Dad has ‘gifted’ his partner £30k which is in her sole account now 5. House valued at £350k 6. £215k ‘gift’ was made to me in 2019.
Total value of assets potentially subject to IHT: £976k
Will Update: The new will leaves the house to me and his partner jointly with her having a right to live there all of her life. The rest of dad’s ‘residual assets’ are to be shared equally between his partner and I.
So, I calculate inheritance tax to be as follows:
£976k less £325k allowance = £651k @ 40% = £264k
Absolutely gutted that we are throwing away £70k of IHT benefit by dad not leaving the house to me as his descendent because, effectively, he and his partner don’t want to risk that I won’t add her name to the deeds after the event.
His partner understands that the money in her sole and joint accounts will need to be used to pay the inheritance tax bill so that she can then live in the property. If you add my £82k and dads £38k to her total of £266k plus the liquid assets of £25k, that makes it £411k less £264k IHT, leaving £147k to be split 50/50 = £73.5k each. From that, £15k has been bequested to friends. That means just £132k to share each; £66k each.
I’ve made it clear to her that IHT has to be paid before any bequests can be made. If she refuses to stump up her cash to pay IHT then I have explained that the house would have to be sold to pay the IHT.
Rob/Golfie/Huskaris: is that how you see it too? Can you see any way we can reduce the IHT and still protect dad’s partner’s right to live in the house for the rest of her days? Is there any point in me seeing a solicitor or IFA?
As you all know, I'm an IFA and not an IHT expert & why I seriously advise you to speak to a solicitor asap. As @Huskaris has said, money being held jointly can be viewed in various ways. Money on deposit is generally viewed as being owned 50/50 so the money in joint accounts is legally only 50% his. It used to be the case (before Self Assessment) that you could deem the % held other than 50/50 & I know many high rate taxpayers who used to say that joint money was, in fact, 100% their non-taxpaying spouse's money.
Therefore conversely, your fathers partner could quite easily say that the money held jointly is hers (or certainly 50% is) and legally she can not be compelled to use any of her half to pay the IHT tax bill. As they are not married she has no legal connection to him and that the Estate (or should I say, the Executor of the Estate) is liable for the tax bill. She could quite legally take her 50% out of the joint bank account tomorrow & spend it as she so wishes.
As for the house. Like @Huksaris, I would have thought the £175k "property" element of the NRB would apply in this case & again why I urge you to speak to a probate solicitor pronto. Also, if she did take 50% of the joint account monies & ran, you could not just sell the house & use the proceeds to pay the IHT bill. I believe that you will have to make provisions for her to live somewhere if she owns the property jointly with you & has a right to stay there until she dies.
Unfortunately what you or her "understand" should happen after your Fathers death with regard to paying the IHT does not mean it will happen. The only thing that matters is what is legal.
Please speak to a solicitor on Monday - as well as the one that drew up his Will as I can see so many things that can go wrong with what you father has done.
Rob: me and his partner are the be beneficiaries of the will but also the joint executors and trustees. As you say, very complicated. The will suits his partner very much in the short term with £66k cash and use of a £350 house for her whole life. I only see the value in the house if I outlive her.
I am assuming from the wording in the will that she and I would be ‘joint tenants’ of the house but those words aren’t actually used. As you suggest, I will seek advice on this whole mess but Christ knows how I get to change anything if the advice tells me that the current arrangement is bad overall.
Rob: me and his partner are the be beneficiaries of the will but also the joint executors and trustees. As you say, very complicated. The will suits his partner very much in the short term with £66k cash and use of a £350 house for her whole life. I only see the value in the house if I outlive her.
I am assuming from the wording in the will that she and I would be ‘joint tenants’ of the house but those words aren’t actually used. As you suggest, I will seek advice on this whole mess but Christ knows how I get to change anything if the advice tells me that the current arrangement is bad overall.
Is the £30k a gift he has given whilst alive or has he left that amount in the will? I think after expenses and your numbers may be slightly out of order depending on the £30k (and indeed what he's left to friends) I think you're likely to see cash of £40-45k each.
Dyer and Co are very good, but don't know where you are based.
Plus you need real clarity on the property, what she is entitled to by way of living there etc. Also as she is being left half in the will she can do with that as she wishes in her own will, in fact of she died her current husband may well inherit it!
Rob: me and his partner are the be beneficiaries of the will but also the joint executors and trustees. As you say, very complicated. The will suits his partner very much in the short term with £66k cash and use of a £350 house for her whole life. I only see the value in the house if I outlive her.
I am assuming from the wording in the will that she and I would be ‘joint tenants’ of the house but those words aren’t actually used. As you suggest, I will seek advice on this whole mess but Christ knows how I get to change anything if the advice tells me that the current arrangement is bad overall.
Also as she is being left half in the will she can do with that as she wishes in her own will, in fact of she died her current husband may well inherit it!
This is so so important. As it stands, anything she inherits will go to her current husband on her death if she doesn't specifically say otherwise in a Will. If she died the day after your father then her husband would then inherit half your House & her portion of the money.
Rob: me and his partner are the be beneficiaries of the will but also the joint executors and trustees. As you say, very complicated. The will suits his partner very much in the short term with £66k cash and use of a £350 house for her whole life. I only see the value in the house if I outlive her.
I am assuming from the wording in the will that she and I would be ‘joint tenants’ of the house but those words aren’t actually used. As you suggest, I will seek advice on this whole mess but Christ knows how I get to change anything if the advice tells me that the current arrangement is bad overall.
Also as she is being left half in the will she can do with that as she wishes in her own will, in fact of she died her current husband may well inherit it!
This is so so important. As it stands, anything she inherits will go to her current husband on her death if she doesn't specifically say otherwise in a Will. If she died the day after your father then her husband would then inherit half your House & her portion of the money.
Normally there is a clause that any beneficiary has to outlive the deceased by a certain number of days (usually 30) but the principal most definitely still applies.
The bit I don't get is what is your fathers reason for leaving her half the house? She's by the sounds of it got a legal entitlement to live there for life whether she owns 0% or 50%, all he's doing by leaving her 50% is allowing her to decide what to do with her 50%, which might be what he wants although not sure why as she's got the use of it whether she owns it or not. She may well leave it to you but if her premium bonds come top you might lose 40% of it anyway if her estate has to pay tax.
Rob: me and his partner are the be beneficiaries of the will but also the joint executors and trustees. As you say, very complicated. The will suits his partner very much in the short term with £66k cash and use of a £350 house for her whole life. I only see the value in the house if I outlive her.
I am assuming from the wording in the will that she and I would be ‘joint tenants’ of the house but those words aren’t actually used. As you suggest, I will seek advice on this whole mess but Christ knows how I get to change anything if the advice tells me that the current arrangement is bad overall.
Is the £30k a gift he has given whilst alive or has he left that amount in the will? I think after expenses and your numbers may be slightly out of order depending on the £30k (and indeed what he's left to friends) I think you're likely to see cash of £40-45k each.
Dyer and Co are very good, but don't know where you are based.
Plus you need real clarity on the property, what she is entitled to by way of living there etc. Also as she is being left half in the will she can do with that as she wishes in her own will, in fact of she died her current husband may well inherit it!
Regarding the property, what she is entitled to by living there would be specified at Land Registry wouldn’t it?
Inheritance Tax advice please on the following scenario:
1. My dad funded the £76,000 purchase of a property abroad in 2010 that was registered in our joint names. 2. In 2011, for convenience purposes, the property was transferred into my sole name. Effectively, he ‘gifted’ me the property abroad when he removed his name from the title deeds 3. I sold the property for £90000 in 2014.
4. I paid dad back £85,000 representing his funds and a share of the profit 5. In 2019 dad ‘gifted me’ £215k
Dad’s not well now and may not make it. The implications of this and other assets held means that we will be liable for 40% inheritance tax on the £215k gift.
So...................I am thinking that maybe I could argue with the tax man that the £85k I paid dad was an interest free loan and that he, effectively repaid me as part of the £215k he gave me in 2019. On the basis that the asset sold was in my sole name, do you think that would be a reasonable story to justify excluding £85k from the £215k when calculating what is and isn’t subject to inheritance tax?
What do you guys ‘in the know’ think of my chances of winning that argument with HMRC?.
First thing I will ask is have you spoken to a solicitor yet ? I remember your post from 2 weeks ago & @Rob7Lee gave you some very helpful advice then. I think you have greater problems than tax on the "gift" if your dads partner still has access to his £170k.
As for the "gift" itself. I don't think you'll get anywhere with HMRC over the return of the loan to your father a few years ago. Did you pay tax on the property gain, if not then you might have more to lose on all this & as @Rob7Lee points out, they will certainly look into ALL aspects of the payments between you & your father over the past 10 years.
Inheritance Tax advice please on the following scenario:
1. My dad funded the £76,000 purchase of a property abroad in 2010 that was registered in our joint names. 2. In 2011, for convenience purposes, the property was transferred into my sole name. Effectively, he ‘gifted’ me the property abroad when he removed his name from the title deeds 3. I sold the property for £90000 in 2014.
4. I paid dad back £85,000 representing his funds and a share of the profit 5. In 2019 dad ‘gifted me’ £215k
Dad’s not well now and may not make it. The implications of this and other assets held means that we will be liable for 40% inheritance tax on the £215k gift.
So...................I am thinking that maybe I could argue with the tax man that the £85k I paid dad was an interest free loan and that he, effectively repaid me as part of the £215k he gave me in 2019. On the basis that the asset sold was in my sole name, do you think that would be a reasonable story to justify excluding £85k from the £215k when calculating what is and isn’t subject to inheritance tax?
What do you guys ‘in the know’ think of my chances of winning that argument with HMRC?.
First thing I will ask is have you spoken to a solicitor yet ? I remember your post from 2 weeks ago & @Rob7Lee gave you some very helpful advice then. I think you have greater problems than tax on the "gift" if your dads partner still has access to his £170k.
As for the "gift" itself. I don't think you'll get anywhere with HMRC over the return of the loan to your father a few years ago. Did you pay tax on the property gain, if not then you might have more to lose on all this & as @Rob7Lee points out, they will certainly look into ALL aspects of the payments between you & your father over the past 10 years.
Hi Golfie. Well, since my last post, I haven’t spoken to a solicitor yet but I have found out that dad has just rewritten his will and I’ve found out more about the exact value and whereabouts of dad’s assets which is as follows:
1. £82k held in a joint account with dad and me 2. £236k held in joint names with dad and his partner 3. £38k held in dads sole name 4. Dad has £25k in PSBs and shares 5. Dad has ‘gifted’ his partner £30k which is in her sole account now 5. House valued at £350k 6. £215k ‘gift’ was made to me in 2019.
Total value of assets potentially subject to IHT: £976k
Will Update: The new will leaves the house to me and his partner jointly with her having a right to live there all of her life. The rest of dad’s ‘residual assets’ are to be shared equally between his partner and I.
So, I calculate inheritance tax to be as follows:
£976k less £325k allowance = £651k @ 40% = £264k
Absolutely gutted that we are throwing away £70k of IHT benefit by dad not leaving the house to me as his descendent because, effectively, he and his partner don’t want to risk that I won’t add her name to the deeds after the event.
His partner understands that the money in her sole and joint accounts will need to be used to pay the inheritance tax bill so that she can then live in the property. If you add my £82k and dads £38k to her total of £266k plus the liquid assets of £25k, that makes it £411k less £264k IHT, leaving £147k to be split 50/50 = £73.5k each. From that, £15k has been bequested to friends. That means just £132k to share each; £66k each.
I’ve made it clear to her that IHT has to be paid before any bequests can be made. If she refuses to stump up her cash to pay IHT then I have explained that the house would have to be sold to pay the IHT.
Rob/Golfie/Huskaris: is that how you see it too? Can you see any way we can reduce the IHT and still protect dad’s partner’s right to live in the house for the rest of her days? Is there any point in me seeing a solicitor or IFA?
As you all know, I'm an IFA and not an IHT expert & why I seriously advise you to speak to a solicitor asap. As @Huskaris has said, money being held jointly can be viewed in various ways. Money on deposit is generally viewed as being owned 50/50 so the money in joint accounts is legally only 50% his. It used to be the case (before Self Assessment) that you could deem the % held other than 50/50 & I know many high rate taxpayers who used to say that joint money was, in fact, 100% their non-taxpaying spouse's money.
Therefore conversely, your fathers partner could quite easily say that the money held jointly is hers (or certainly 50% is) and legally she can not be compelled to use any of her half to pay the IHT tax bill. As they are not married she has no legal connection to him and that the Estate (or should I say, the Executor of the Estate) is liable for the tax bill. She could quite legally take her 50% out of the joint bank account tomorrow & spend it as she so wishes.
As for the house. Like @Huksaris, I would have thought the £175k "property" element of the NRB would apply in this case & again why I urge you to speak to a probate solicitor pronto. Also, if she did take 50% of the joint account monies & ran, you could not just sell the house & use the proceeds to pay the IHT bill. I believe that you will have to make provisions for her to live somewhere if she owns the property jointly with you & has a right to stay there until she dies.
Unfortunately what you or her "understand" should happen after your Fathers death with regard to paying the IHT does not mean it will happen. The only thing that matters is what is legal.
Please speak to a solicitor on Monday - as well as the one that drew up his Will as I can see so many things that can go wrong with what you father has done.
Only just saw that part, not entirely true when it comes to estates;
"Are there inheritance tax implications when a joint bank account holder dies?
HMRC asks detailed questions about joint accounts on the inheritance tax return, which is submitted as part of the application for probate or letters of administration when someone dies.
Whilst HMRC may not be too concerned about the ownership of joint accounts held by spouses or civil partners (as such transfers would be exempt from inheritance tax), they will look more closely at accounts held by others, such as unmarried couples and parents and children.
Rather than simply assuming each account holder is entitled to an equal share of the funds, HMRC usually treats account holders as owning a share of the funds which is proportionate to their contributions to the account. For example, if one account holder provided all the funds, the whole balance of the account will be treated as belonging to him or her on death, and potentially subject to inheritance tax.
Withdrawals from the account will usually be set against that person’s own contributions as far as possible. Withdrawals which exceed a person’s own contributions may be treated as a lifetime gift from the other account holder, which could have inheritance tax consequences.
Inheritance tax due on death which is attributable to the funds in a joint account is payable by the surviving account holder who has inherited funds by survivorship (rather than necessarily from the deceased’s estate), unless there is wording to the contrary in any will made by the deceased."
As I say, unwittingly this is going to be very very complicated...... I can quite easily see a situation where @meldrew66 ends up owing money.
Is the partner going to own half of the house on your fathers death (and therefore it becomes part of her estate and where does that go when she passes) or just the right to live there till she dies ? I’m just wondering for clarity on the numbers front for you as in you’ll only have half of its value towards your lump .
oohaah: it’s really hard to explain what the will means in that regard. There is a clause saying that she can continue to live there for as long as she wishes. However, it also says that is she vacates it, it is to be ‘held in trust by my trustees’ (who are me and his partner) and, basically, can be sold with the proceeds going equally to us both. Crucially, it says that, on her death, the house becomes mine. Oddly, it doesn’t say the same about her getting it if I die first.
i am assuming that, on dad’s death, the house would be registered at HMLR in the joint names of myself and his partner as ‘joint tenants’. I will get this confirmed by a solicitor. If I am right then, presumably, on my death before her, it becomes hers?!
As others have said, it feels very messy, very tax inefficient and potentially a nightmare for me to have to resolve as the joint executor of the will with his partner. Can you imagine what would happen if she and I fell out at some point?!
oohaah: it’s really hard to explain what the will means in that regard. There is a clause saying that she can continue to live there for as long as she wishes. However, it also says that is she vacates it, it is to be ‘held in trust by my trustees’ (who are me and his partner) and, basically, can be sold with the proceeds going equally to us both. Crucially, it says that, on her death, the house becomes mine. Oddly, it doesn’t say the same about her getting it if I die first.
i am assuming that, on dad’s death, the house would be registered at HMLR in the joint names of myself and his partner as ‘joint tenants’. I will get this confirmed by a solicitor. If I am right then, presumably, on my death before her, it becomes hers?!
As others have said, it feels very messy, very tax inefficient and potentially a nightmare for me to have to resolve as the joint executor of the will with his partner. Can you imagine what would happen if she and I fell out at some point?!
Ok, this is starting to make little more sense .......... (a little!)
I think you may be getting confused between the roles of Executor, Trustee and beneficiaries, predominantly because you and his partner are all three, but they are all very different.
1. You and his partner are executors meaning you have to deal with his estate (even if he left 100% to Battersea dogs home, you are simply administering his wishes).
2. With respect to the property he is making you both trustees (not clear if the trust is only formed if she vacates)
3. You are beneficiaries, again not 100% clear as to how/what you inherit.
Usually what you see in these circumstances is;
1. The property is left to the child 100% and is held in trust by trustees. 2. The partner has a right of occupancy for life 3. Upon partners death the trust passes the property to the beneficiary.
All of that is quite common and means although the beneficiary has 100% ownership if you like, in reality you can do nothing until the partner dies.
4. There is sometimes a clause about if the property needs to be sold what happens (i.e. if she had to downsize, move to a bungalow etc).
Are you sure he hasn't left it 100% to you with her having a right of occupancy?
sounds like agg , may your dad live on without pain for many a year
once your father passes
She stays there You die first all hers she dies first all yours she sells before either die and you miss out on half the value cos it’s been turned in to something else and she can spunk it and the same for you if she sells you then have cash and if you die first she doesn’t get the other half . basically one of you has to pop the other off first to receive full benefit of the house
id mentally write the house off and it’s a bonus if it ever gets to you (although it will possibly cost whatever else you receive in IHT but none of which has been crystallised) basically I haven’t a clue . good luck sir
I think @Rob7Lee has it. Much more common to have the property left to a child with the spouse/partner having a right to reside than to leave it 50/50.
sounds like agg , may your dad live on without pain for many a year
once your father passes
She stays there You die first all hers she dies first all yours she sells before either die and you miss out on half the value cos it’s been turned in to something else and she can spunk it and the same for you if she sells you then have cash and if you die first she doesn’t get the other half . basically one of you has to pop the other off first to receive full benefit of the house
id mentally write the house off and it’s a bonus if it ever gets to you (although it will possibly cost whatever else you receive in IHT but none of which has been crystallised) basically I haven’t a clue . good luck sir
OK, I've attached the part of the will that covers arrangements for the property. Does this help us to interpret the terms and likely IHT implications?
Yes, she has right to live there, doesn't say she owns it, or 50% which will be elsewhere in the will. it looks basically as I say above. The property is to be held in trust until she voluntarily no longer lives there or dies, she is also responsible for maintaining, insuring it etc.
Basically;
On Death the house is given to the Trustees free of IHT.
Trustees must allow the partner to live there rent free as long as she keeps in good repair/maintains it etc.
if she ceases to live there it becomes part of the estate (and therefore is distributed as he defines)
Upon her death it passes to you
EDIT; not possible to say with 100% certainty without seeing the rest but it certainly doesn't look as if the property is being left directly with you and therefore you aren't able to use the NRB to minimise IHT.
Yes, she has right to live there, doesn't say she owns it, or 50% which will be elsewhere in the will. it looks basically as I say above. The property is to be held in trust until she voluntarily no longer lives there or dies, she is also responsible for maintaining, insuring it etc.
Basically;
On Death the house is given to the Trustees free of IHT.
Trustees must allow the partner to live there rent free as long as she keeps in good repair/maintains it etc.
if she ceases to live there it becomes part of the estate (and therefore is distributed as he defines)
Upon her death it passes to you
Yes, that’s how I read it. However, the ‘residual estate’ is to his partner and I jointly and, therefore, if she agrees to move out and sell it, she gets half the net sale proceeds. I have attached the final page (anonymised) showing that.
From your personal experiences in this area, do you think this means we will or won’t be able to claim the extra £175k NRB IHT benefit?
Hard to tell as depends what’s said before it. I can see it refers to estate at the beginning, is the house separated from that? The fact the house is listed separately as per your first picture may mean it is.
With respect this is different to what you’ve been saying, he’s giving to his partner far more than half based on how you said the cash was held. Is property mentioned on page 2!?!
You have a photo of page 2 already. Starts with point 6 and is all about the house. The cash Balances I previously stated is correct; £236k in joint names with her, £82k joint with me and £38k in his sole name. The thing is, she knows the money she has is technically hers but, in practice, the house would have to be sold to pay the £260k IHT if she refuses to use her cash to pay the IHT. She would be making herself homeless albeit with £266k of cash and an entitlement to 50% of the net sale house proceeds and dads sole assets of approx £58k after IHT is paid. That would give her approx £60k more. She’d end up with a total of £294k and me £82k + £60k, total £142k.
As you say, she definitely gets significantly more than me in that scenario!
You have a photo of page 2 already. Starts with point 6 and is all about the house. The cash Balances I previously stated is correct; £236k in joint names with her, £82k joint with me and £38k in his sole name. The thing is, she knows the money she has is technically hers but, in practice, the house would have to be sold to pay the £260k IHT if she refuses to use her cash to pay the IHT. She would be making herself homeless albeit with £266k of cash and an entitlement to 50% of the net sale house proceeds and dads sole assets of approx £58k after IHT is paid. That would give her approx £60k more. She’d end up with a total of £294k and me £82k + £60k, total £142k.
As you say, she definitely gets significantly more than me in that scenario!
Yes and no due to previous gifts.
i thought you said it was all to be split 50/50 and calculated it all on that basis, that absolutely isn't what your fathers will says at all from what you have shown, far from it, and neither would she be due to pay all the IHT from her joint account with your father (anymore than you are from yours). However I do think your father may believe he is splitting it 50/50 when you include past gifts, and there is also a potential issue with what he is saying he is leaving free of IHT (just because he writes it doesn't mean he can or anyone can say i'm leaving £2m free of IHT..........).
Does your fathers will mention anywhere 50/50 between you?
Just parking the house for 1 minute, as I see it from what we have now seen (and before IHT)
1. £82k Goes to you 2. £236k Goes to his partner 3. £38k split between you (assuming his will does say to split the remaining proceeds 50/50) 4. £25k pays the 3x £5k and hopefully all other funeral/estate expenses 5. £30k partner has 5. £350k (park for a moment) 6. £215k you have
It could be said that;
1. You have had £215k + will get £82K + £19K = £316k 2. Partner has had £30k + will get £236k + £19k = £285k
So it's like brexit, 52/48% split. I do wonder if that is why your father has just gifted her that £30k to make it as near as damn it 50/50.
Importantly she will not be due to pay all the IHT i'm afraid, not sure why you would think that? She may offer to, but she absolutely will not have to fund all the IHT bill.
As in my first paragraph i'm not sure it would be legally binding that your dad says the house is free of IHT, with only about £80k (or 55k after the 15k gifts to friends) of the allowance left there is a substantial amount due on it's value of around £120k (taking off the £55k).
If I were in her shoes i'd be rightly saying you owed half of the £120k (if the house is 50/50) as well as 40% of your 82k, i.e. around 93k, and she'd win that one very easily I think.
Urgent call to the solicitors/accountants tomorrow I think.
You have a photo of page 2 already. Starts with point 6 and is all about the house. The cash Balances I previously stated is correct; £236k in joint names with her, £82k joint with me and £38k in his sole name. The thing is, she knows the money she has is technically hers but, in practice, the house would have to be sold to pay the £260k IHT if she refuses to use her cash to pay the IHT. She would be making herself homeless albeit with £266k of cash and an entitlement to 50% of the net sale house proceeds and dads sole assets of approx £58k after IHT is paid. That would give her approx £60k more. She’d end up with a total of £294k and me £82k + £60k, total £142k.
As you say, she definitely gets significantly more than me in that scenario!
Yes and no due to previous gifts.
i thought you said it was all to be split 50/50 and calculated it all on that basis, that absolutely isn't what your fathers will says at all from what you have shown, far from it, and neither would she be due to pay all the IHT from her joint account with your father (anymore than you are from yours). However I do think your father may believe he is splitting it 50/50 when you include past gifts, and there is also a potential issue with what he is saying he is leaving free of IHT (just because he writes it doesn't mean he can or anyone can say i'm leaving £2m free of IHT..........).
Does your fathers will mention anywhere 50/50 between you?
Just parking the house for 1 minute, as I see it from what we have now seen (and before IHT)
1. £82k Goes to you 2. £236k Goes to his partner 3. £38k split between you (assuming his will does say to split the remaining proceeds 50/50) 4. £25k pays the 3x £5k and hopefully all other funeral/estate expenses 5. £30k partner has 5. £350k (park for a moment) 6. £215k you have
It could be said that;
1. You have had £215k + will get £82K + £19K = £316k 2. Partner has had £30k + will get £236k + £19k = £285k
So it's like brexit, 52/48% split. I do wonder if that is why your father has just gifted her that £30k to make it as near as damn it 50/50.
Importantly she will not be due to pay all the IHT i'm afraid, not sure why you would think that? She may offer to, but she absolutely will not have to fund all the IHT bill.
As in my first paragraph i'm not sure it would be legally binding that your dad says the house is free of IHT, with only about £80k (or 55k after the 15k gifts to friends) of the allowance left there is a substantial amount due on it's value of around £120k (taking off the £55k).
If I were in her shoes i'd be rightly saying you owed half of the £120k (if the house is 50/50) as well as 40% of your 82k, i.e. around 93k, and she'd win that one very easily I think.
Urgent call to the solicitors/accountants tomorrow I think.
You have a photo of page 2 already. Starts with point 6 and is all about the house. The cash Balances I previously stated is correct; £236k in joint names with her, £82k joint with me and £38k in his sole name. The thing is, she knows the money she has is technically hers but, in practice, the house would have to be sold to pay the £260k IHT if she refuses to use her cash to pay the IHT. She would be making herself homeless albeit with £266k of cash and an entitlement to 50% of the net sale house proceeds and dads sole assets of approx £58k after IHT is paid. That would give her approx £60k more. She’d end up with a total of £294k and me £82k + £60k, total £142k.
As you say, she definitely gets significantly more than me in that scenario!
Yes and no due to previous gifts.
i thought you said it was all to be split 50/50 and calculated it all on that basis, that absolutely isn't what your fathers will says at all from what you have shown, far from it, and neither would she be due to pay all the IHT from her joint account with your father (anymore than you are from yours). However I do think your father may believe he is splitting it 50/50 when you include past gifts, and there is also a potential issue with what he is saying he is leaving free of IHT (just because he writes it doesn't mean he can or anyone can say i'm leaving £2m free of IHT..........).
Does your fathers will mention anywhere 50/50 between you?
Just parking the house for 1 minute, as I see it from what we have now seen (and before IHT)
1. £82k Goes to you 2. £236k Goes to his partner 3. £38k split between you (assuming his will does say to split the remaining proceeds 50/50) 4. £25k pays the 3x £5k and hopefully all other funeral/estate expenses 5. £30k partner has 5. £350k (park for a moment) 6. £215k you have
It could be said that;
1. You have had £215k + will get £82K + £19K = £316k 2. Partner has had £30k + will get £236k + £19k = £285k
So it's like brexit, 52/48% split. I do wonder if that is why your father has just gifted her that £30k to make it as near as damn it 50/50.
Importantly she will not be due to pay all the IHT i'm afraid, not sure why you would think that? She may offer to, but she absolutely will not have to fund all the IHT bill.
As in my first paragraph i'm not sure it would be legally binding that your dad says the house is free of IHT, with only about £80k (or 55k after the 15k gifts to friends) of the allowance left there is a substantial amount due on it's value of around £120k (taking off the £55k).
If I were in her shoes i'd be rightly saying you owed half of the £120k (if the house is 50/50) as well as 40% of your 82k, i.e. around 93k, and she'd win that one very easily I think.
Urgent call to the solicitors/accountants tomorrow I think.
PS, I note this will is draft.......
Do you read it that the house is 50/50? It is if sold but 100% mine if not sold and she dies as it then is 100% mine.
You have a photo of page 2 already. Starts with point 6 and is all about the house. The cash Balances I previously stated is correct; £236k in joint names with her, £82k joint with me and £38k in his sole name. The thing is, she knows the money she has is technically hers but, in practice, the house would have to be sold to pay the £260k IHT if she refuses to use her cash to pay the IHT. She would be making herself homeless albeit with £266k of cash and an entitlement to 50% of the net sale house proceeds and dads sole assets of approx £58k after IHT is paid. That would give her approx £60k more. She’d end up with a total of £294k and me £82k + £60k, total £142k.
As you say, she definitely gets significantly more than me in that scenario!
Yes and no due to previous gifts.
i thought you said it was all to be split 50/50 and calculated it all on that basis, that absolutely isn't what your fathers will says at all from what you have shown, far from it, and neither would she be due to pay all the IHT from her joint account with your father (anymore than you are from yours). However I do think your father may believe he is splitting it 50/50 when you include past gifts, and there is also a potential issue with what he is saying he is leaving free of IHT (just because he writes it doesn't mean he can or anyone can say i'm leaving £2m free of IHT..........).
Does your fathers will mention anywhere 50/50 between you?
Just parking the house for 1 minute, as I see it from what we have now seen (and before IHT)
1. £82k Goes to you 2. £236k Goes to his partner 3. £38k split between you (assuming his will does say to split the remaining proceeds 50/50) 4. £25k pays the 3x £5k and hopefully all other funeral/estate expenses 5. £30k partner has 5. £350k (park for a moment) 6. £215k you have
It could be said that;
1. You have had £215k + will get £82K + £19K = £316k 2. Partner has had £30k + will get £236k + £19k = £285k
So it's like brexit, 52/48% split. I do wonder if that is why your father has just gifted her that £30k to make it as near as damn it 50/50.
Importantly she will not be due to pay all the IHT i'm afraid, not sure why you would think that? She may offer to, but she absolutely will not have to fund all the IHT bill.
As in my first paragraph i'm not sure it would be legally binding that your dad says the house is free of IHT, with only about £80k (or 55k after the 15k gifts to friends) of the allowance left there is a substantial amount due on it's value of around £120k (taking off the £55k).
If I were in her shoes i'd be rightly saying you owed half of the £120k (if the house is 50/50) as well as 40% of your 82k, i.e. around 93k, and she'd win that one very easily I think.
Urgent call to the solicitors/accountants tomorrow I think.
You have a photo of page 2 already. Starts with point 6 and is all about the house. The cash Balances I previously stated is correct; £236k in joint names with her, £82k joint with me and £38k in his sole name. The thing is, she knows the money she has is technically hers but, in practice, the house would have to be sold to pay the £260k IHT if she refuses to use her cash to pay the IHT. She would be making herself homeless albeit with £266k of cash and an entitlement to 50% of the net sale house proceeds and dads sole assets of approx £58k after IHT is paid. That would give her approx £60k more. She’d end up with a total of £294k and me £82k + £60k, total £142k.
As you say, she definitely gets significantly more than me in that scenario!
Yes and no due to previous gifts.
i thought you said it was all to be split 50/50 and calculated it all on that basis, that absolutely isn't what your fathers will says at all from what you have shown, far from it, and neither would she be due to pay all the IHT from her joint account with your father (anymore than you are from yours). However I do think your father may believe he is splitting it 50/50 when you include past gifts, and there is also a potential issue with what he is saying he is leaving free of IHT (just because he writes it doesn't mean he can or anyone can say i'm leaving £2m free of IHT..........).
Does your fathers will mention anywhere 50/50 between you?
Just parking the house for 1 minute, as I see it from what we have now seen (and before IHT)
1. £82k Goes to you 2. £236k Goes to his partner 3. £38k split between you (assuming his will does say to split the remaining proceeds 50/50) 4. £25k pays the 3x £5k and hopefully all other funeral/estate expenses 5. £30k partner has 5. £350k (park for a moment) 6. £215k you have
It could be said that;
1. You have had £215k + will get £82K + £19K = £316k 2. Partner has had £30k + will get £236k + £19k = £285k
So it's like brexit, 52/48% split. I do wonder if that is why your father has just gifted her that £30k to make it as near as damn it 50/50.
Importantly she will not be due to pay all the IHT i'm afraid, not sure why you would think that? She may offer to, but she absolutely will not have to fund all the IHT bill.
As in my first paragraph i'm not sure it would be legally binding that your dad says the house is free of IHT, with only about £80k (or 55k after the 15k gifts to friends) of the allowance left there is a substantial amount due on it's value of around £120k (taking off the £55k).
If I were in her shoes i'd be rightly saying you owed half of the £120k (if the house is 50/50) as well as 40% of your 82k, i.e. around 93k, and she'd win that one very easily I think.
Urgent call to the solicitors/accountants tomorrow I think.
PS, I note this will is draft.......
Do you read it that the house is 50/50? It is if sold but 100% mine if not sold and she dies as it then is 100% mine.
Comments
If the right to live there is a legal agreement for the partner the nil rate band for housing may not apply as you in effect have the property held in trust but it does depend on the type of trust, if you have absolute interest or interest in possession etc.
From what we know I think you are right with;
£976k less £325k allowance = £651k @ 40% = £264k
The estate as above would split as follows;
£976k - Estate
£264k - IHT to pay
£30k - to Partner
£350k - House Value
Remaining to be distributed 50/50 with you and your fathers partner £332k = £166k each.
You really need to see a Lawyer and probably a IHT specialist accountant ASAP. Appreciate what your dad is trying to do but he's pretty much doing it in the least efficient way for all concerned.
Therefore conversely, your fathers partner could quite easily say that the money held jointly is hers (or certainly 50% is) and legally she can not be compelled to use any of her half to pay the IHT tax bill. As they are not married she has no legal connection to him and that the Estate (or should I say, the Executor of the Estate) is liable for the tax bill. She could quite legally take her 50% out of the joint bank account tomorrow & spend it as she so wishes.
As for the house. Like @Huksaris, I would have thought the £175k "property" element of the NRB would apply in this case & again why I urge you to speak to a probate solicitor pronto. Also, if she did take 50% of the joint account monies & ran, you could not just sell the house & use the proceeds to pay the IHT bill. I believe that you will have to make provisions for her to live somewhere if she owns the property jointly with you & has a right to stay there until she dies.
Unfortunately what you or her "understand" should happen after your Fathers death with regard to paying the IHT does not mean it will happen. The only thing that matters is what is legal.
Please speak to a solicitor on Monday - as well as the one that drew up his Will as I can see so many things that can go wrong with what you father has done.
Dyer and Co are very good, but don't know where you are based.
Plus you need real clarity on the property, what she is entitled to by way of living there etc. Also as she is being left half in the will she can do with that as she wishes in her own will, in fact of she died her current husband may well inherit it!
The bit I don't get is what is your fathers reason for leaving her half the house? She's by the sounds of it got a legal entitlement to live there for life whether she owns 0% or 50%, all he's doing by leaving her 50% is allowing her to decide what to do with her 50%, which might be what he wants although not sure why as she's got the use of it whether she owns it or not. She may well leave it to you but if her premium bonds come top you might lose 40% of it anyway if her estate has to pay tax.
https://www.thegazette.co.uk/wills-and-probate/content/103479
"Are there inheritance tax implications when a joint bank account holder dies?
HMRC asks detailed questions about joint accounts on the inheritance tax return, which is submitted as part of the application for probate or letters of administration when someone dies.
Whilst HMRC may not be too concerned about the ownership of joint accounts held by spouses or civil partners (as such transfers would be exempt from inheritance tax), they will look more closely at accounts held by others, such as unmarried couples and parents and children.
Rather than simply assuming each account holder is entitled to an equal share of the funds, HMRC usually treats account holders as owning a share of the funds which is proportionate to their contributions to the account. For example, if one account holder provided all the funds, the whole balance of the account will be treated as belonging to him or her on death, and potentially subject to inheritance tax.
Withdrawals from the account will usually be set against that person’s own contributions as far as possible. Withdrawals which exceed a person’s own contributions may be treated as a lifetime gift from the other account holder, which could have inheritance tax consequences.
Inheritance tax due on death which is attributable to the funds in a joint account is payable by the surviving account holder who has inherited funds by survivorship (rather than necessarily from the deceased’s estate), unless there is wording to the contrary in any will made by the deceased."
As I say, unwittingly this is going to be very very complicated...... I can quite easily see a situation where @meldrew66 ends up owing money.
I’m just wondering for clarity on the numbers front for you as in you’ll only have half of its value towards your lump .
i am assuming that, on dad’s death, the house would be registered at HMLR in the joint names of myself and his partner as ‘joint tenants’. I will get this confirmed by a solicitor. If I am right then, presumably, on my death before her, it becomes hers?!
I think you may be getting confused between the roles of Executor, Trustee and beneficiaries, predominantly because you and his partner are all three, but they are all very different.
1. You and his partner are executors meaning you have to deal with his estate (even if he left 100% to Battersea dogs home, you are simply administering his wishes).
2. With respect to the property he is making you both trustees (not clear if the trust is only formed if she vacates)
3. You are beneficiaries, again not 100% clear as to how/what you inherit.
Usually what you see in these circumstances is;
1. The property is left to the child 100% and is held in trust by trustees.
2. The partner has a right of occupancy for life
3. Upon partners death the trust passes the property to the beneficiary.
All of that is quite common and means although the beneficiary has 100% ownership if you like, in reality you can do nothing until the partner dies.
4. There is sometimes a clause about if the property needs to be sold what happens (i.e. if she had to downsize, move to a bungalow etc).
Are you sure he hasn't left it 100% to you with her having a right of occupancy?
once your father passes
She stays there
You die first all hers
she dies first all yours
she sells before either die and you miss out on half the value cos it’s been turned in to something else and she can spunk it
and the same for you if she sells you then have cash and if you die first she doesn’t get the other half .
basically one of you has to pop the other off first to receive full benefit of the house
id mentally write the house off and it’s a bonus if it ever gets to you (although it will possibly cost whatever else you receive in IHT but none of which has been crystallised)
basically I haven’t a clue .
good luck sir
Basically;
On Death the house is given to the Trustees free of IHT.
Trustees must allow the partner to live there rent free as long as she keeps in good repair/maintains it etc.
if she ceases to live there it becomes part of the estate (and therefore is distributed as he defines)
Upon her death it passes to you
EDIT; not possible to say with 100% certainty without seeing the rest but it certainly doesn't look as if the property is being left directly with you and therefore you aren't able to use the NRB to minimise IHT.
From your personal experiences in this area, do you think this means we will or won’t be able to claim the extra £175k NRB
As you say, she definitely gets significantly more than me in that scenario!
Yes and no due to previous gifts.
i thought you said it was all to be split 50/50 and calculated it all on that basis, that absolutely isn't what your fathers will says at all from what you have shown, far from it, and neither would she be due to pay all the IHT from her joint account with your father (anymore than you are from yours). However I do think your father may believe he is splitting it 50/50 when you include past gifts, and there is also a potential issue with what he is saying he is leaving free of IHT (just because he writes it doesn't mean he can or anyone can say i'm leaving £2m free of IHT..........).
Does your fathers will mention anywhere 50/50 between you?
Just parking the house for 1 minute, as I see it from what we have now seen (and before IHT)
1. £82k Goes to you
2. £236k Goes to his partner
3. £38k split between you (assuming his will does say to split the remaining proceeds 50/50)
4. £25k pays the 3x £5k and hopefully all other funeral/estate expenses
5. £30k partner has
5. £350k (park for a moment)
6. £215k you have
It could be said that;
1. You have had £215k + will get £82K + £19K = £316k
2. Partner has had £30k + will get £236k + £19k = £285k
So it's like brexit, 52/48% split. I do wonder if that is why your father has just gifted her that £30k to make it as near as damn it 50/50.
Importantly she will not be due to pay all the IHT i'm afraid, not sure why you would think that? She may offer to, but she absolutely will not have to fund all the IHT bill.
As in my first paragraph i'm not sure it would be legally binding that your dad says the house is free of IHT, with only about £80k (or 55k after the 15k gifts to friends) of the allowance left there is a substantial amount due on it's value of around £120k (taking off the £55k).
If I were in her shoes i'd be rightly saying you owed half of the £120k (if the house is 50/50) as well as 40% of your 82k, i.e. around 93k, and she'd win that one very easily I think.
Urgent call to the solicitors/accountants tomorrow I think.
PS, I note this will is draft.......
https://www.thegazette.co.uk/wills-and-probate/content/103479