My father died about four years ago and while he seemed a decent hard working guy, in hindsight his financial control of the purse strings had made my mother virtually his slave. His will, split his estate between me, my sister and my nephew with Mum allowed to live in the family home for the duration of her life.
My understanding was that the spouse inherited 100% but seemingly not. Or does she? Further complicated by fact that he only owned 50% of house. It was in joint names. A £2 land search by solicitor would have turned up this anomoly so they are incompetent and will cost me an arm and a leg to resolve. So does Mum own 50% and us decendants 1/6 each or is will null and void due to cock up, or does a spouse over-ride a will?
Bollocks to probate, now a new Tory tax regardless of the cost of admin, we transferred the whole property to Mum. Does she own it outright or does the old git's will have some sway?
The ultimate answer may have a bearing on how much Hammond can extract from our family in inheritance tax while his mates use offshore family trusts to pay fuck all.
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First question is who drew up the will - was is professionally done or was it a £5 jobbie from WH Smith ? If done properly by a solicitor then 99 times out of 100 its legally binding - best check what is actually says as it should make provision for the property, especially if it was held as joint tenants or tenants in common. If held as joint tenants then your mum should now own all of it, but if held as tenants in common then he may well have left his half to you kids.
I wouldn't worry too much about IHT. The threshold is £325k per person = if everything passed to your mum without using his "nil rate band" then your mum can use his allowance when she dies, ie when she dies only anything above £650k is taxed - and as from next year there is an additional amount for properties, which should increase this to £1m by 2020.
If he'd left everything to your Mum, then the entire estate would have been exempt of inheritance tax at this point. Then when she died you'd be able to use the allowance from his estate in addition to hers before having to pay inheritance tax on what she left. So if his allowance was 325,000 and so was hers you'd have 650k to play with before inheritance tax kicked in (I can't remember if that's the right figure now, as I know it was due to change but I'm not sure when, or whether that was the old figure or the new one). As he hasn't done that, you end up using his allowance now on what he's left the rest of you, but her bit is still exempt. I don't know if you get to carry forward any unused allowance to her estate in these circumstances, as everyone [1] in my family just does the "everything to spouse unless we die within 28 days of each other" thing, cos it makes the whole probate thing SO much simpler.
If he'd left her absolutely nothing, or so little she'd lose the house, or he'd not left a will at all, then I think she'd have grounds to contest it, as you're meant to make "reasonable financial provision" for your dependents but there's no obligation to leave everything to your spouse. You really need to get proper legal advice as to whether it applies in this case, particularly as she does own half the house herself. If you all had a massive falling out over money, or one of you was made bankrupt so there was a risk of your share becoming forfeit to the creditors, would her half of the value of the house be sufficient for her to find a reasonable place to live? If not, that might help her case.
Finally, while it's really good of you to sign over your shares of the house to your Mum, that may also cause you issues with the taxman. First, if one of you gets run over by a bus within 7 years, then the value of this gift gets included in your estate for working out the inheritance tax on that. There may be other factors too that someone who knows the tax system better than me will be able to point out.
Short answer: you really need to get advice from a decent wills and probate lawyer on this one.
[1] Well, not quite everyone. There was the great-uncle who left a will leaving everything to two of his sisters, because they'd effectively been his carers. Unfortunately, despite the fact he'd got it witnessed he'd neglected to sign it, so legally his estate was shared between all seven of his surviving siblings. Most of them wanted to sign over their shares to the sisters who should have inherited, but there were one or two hold-outs, and it caused all sorts of bad feeling for a while.
However I do know that there are two types of 'Joint Ownership' of property.
One is, confusingly, 'Joint Ownership' and in that situation the property passes to the other joint owner on death. As I understand it that can only be varied by mutual agreement. So, if they were (are) joint owners did your mother agree to the property clauses within the Will? If not then the property should pass to her under the normal rules of joint ownership I would think.
It becomes more complicated with the second form of 'joint ownership,' 'Tenants In Common' and percentage ownerships of the property can come into play then. If that is the case then the terms of the will would be valid and operable for your father's share assuming the Will is otherwise valid.
In all probability, as a married couple, Option 1, as I've set out the two options, probably applies. Tenants In Common tend to be unmarried joint buyers.
Hope you sort it and my condolences.
EDIT: https://www.gov.uk/joint-property-ownership/overview
and http://www.mindatrest.co.uk/blog/how-to-tell-if-property-is-owned-as-tenants-in-common
and http://www.mindatrest.co.uk/blog/tenants-common-versus-joint-tenants
What it sounds like your Dad has done is leave his half in trust to Mum to use whilst she remains at home. It may be set up that if she moves she will not have the right to use the monies from any sale and that would pass to the beneficiaries of your father's estate.
Unless the house is worth more than £650k then IHT isn't a problem and the remainder of your father's allowance under that legislation can pass to your mum.
How has this not been sorted out yet four years after the fact? Who has been acting as executor? If there is any IHT due (i.e. if his estate was worth more than £325K), then get a decent solicitor, the fees you will pay him/her are better than any potential IHT liability and the sensible thing to have done would be to transfer everything to his spouse tax-free.
The deadline for varying or disclaiming the gifts for IHT purposes is 2 years so that is no good. As LenGlover pointed out, you need to find out what kind of ownership the house was held in, this will be crucial.
And good luck.