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Property law question. IHT on house BIL has lifetime right to live in.

(4 Posts)
loinnir Thu 22-Dec-16 14:03:46

DH was left half share of his mother's house in her will with the shock proviso that his brother could live in it as long as he wanted to for free. If BIL wanted to move then proceeds to be split.

We paid the IHT due on the estate at the time asBIL had no money. His mother also owed us a 6 figure sum (undocumented) that she told us we would get back in her will - ha! BIL has told us he will never leave the house (in his late 40's). It has appreciated a lot again in value and is our only "asset" - our house has appreciated little in value (different part of the country) has a mortgage and DH dipped into our equity to pay the IHT and to make MIL loans (against my advice).

Question : If DH died then his half share would be part of his estate and I / our DC would presumably be liable for IHT on his share? If so I would be unable to pay this or the interest on a loan(if I could get one) - what would happen - would I be able to/ have to force a sale of MIL house?

loinnir Thu 22-Dec-16 14:38:04

Should clarify I called DP my DH above which changes things (been together over 30 years but I realsie this means nothing in IHT and nil rate bands)

LIZS Thu 22-Dec-16 16:07:03

If the property half is worth less than £325 unless he has other assets which take him over the threshold there wouldn't be iht to pay. If he does sell eventually there may be Capital Gains Tax on the difference between when he inherited and sold. You really need some good professional advice as to how you can minimise liabilities as it will differ than were you married , when you could inherit the property tax free and use both allowances before it passed to the children. Would he be prepared to add you to the deeds?

LIZS Thu 22-Dec-16 16:07:30

*£325k

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