AIBU - inheritance sad story

This is exactly what has happened here.

He needs to speak to a solicitor. They are being greedy.

That is the danger of signing your house over. He needs to live with the consequences. This should have been sorted out years ago. They've had 25 years to sort it.

Setting any moral questions aside, your DM definitely needs legal / tax advice before she makes any moves. Playing nice could cost her a lot of money.

If its legally their house there probably isn't much he can do. I think at the very least it should be split between his 6 children, not just the original 5, but it can't be forced I don't think. My mum's friend signed her house and farm over to her only son, when he married he and his wife made her life a misery, she had nowhere else to go so she had a truly miserable old age.

What a lovely post. Do you feel better now? 🙄

They probably should be, but people don’t think about them. She clearly states in her OP that it was before he met and married his second wife. Whose daughter is in her 50s. He’s 86, so he must have been a very young man.

I have to admit I’m slightly unclear on some details. Usually the mother and children stay in the house. This would make sense of the gift. But who lives there now? It sounds like he does with his second wife. But maybe he doesn’t.

The problem is though he's already transferred title - legally no longer his house and so not his decision. If it was done via the will, then yes it would have been his decision as to where the property went, but that's not the case here.

I think I'm with your mum. Yes it was his house that he paid off, but he gave it to the 2 eldest children. So it isn't his house now. The new wife shouldn't have expect the house, despite having lived in it, because it isn't their house. Perhaps when the new wife came along they should have moved into a house together then to make into a home, rather than create a home in someone else's house, iyswim.

Do you reclaim gifts after you've given them because you changed your mind later after a change in circumstances?

There's another potential problem further down the line. What if the two owners of the house don't want to share it with the younger three. Your grandfather did a strange thing gifting it to just two of his children.

Their reluctance might be because if they were to 'gift' the house back to him as you want, they would both (personally) have to pay capital gains tax on the difference between the value of the house when they received it, and what it is valued now. So it could cost them tens of thousands of pounds to give him his house back. (Obviously they would have the capital gains tax to pay when they sell it after his death too, but that would be offset by their share of the house sale).

So it might not be the simple moral decision that you think it is.

He is a tenant, your mum and siblings the Landlord. He has no house to leave his wife.

Future care costs are a consideration from the moment you are born. Yes, they are just a possibility and the likelihood of actually needing it doesn't become clear until later, but it is disingenuous to say that they weren't a consideration before. The OP says he did to prevent the money "going to charity or something". A will would direct the money to the people he wanted to have it, the only thing signing the house over to kids could do is avoid it being sold for care fees and avoid potential inheritance taxes (though it seems, from what others have posted), that this later is likely not to have been achieved anyway.

Yes so he was quite happy for the rest of us to fund any care home fees whilst passing on his assets to his children but is now whining about it.
Surely he should have thought about this when he got remarried? Why does his wife not work and support herself, or did she thing she could latch on to an older man with assets.

I think this is a very sad position for everyone but ultimately your grandad made a decision to try to avoid some sort of financial liability at a very early age and he now has to face the consequences of this decision. If I was your mum I don't think I would agree to transfer the ownership either- and as others have said this isn't straightforward as there are tax implications. Who has been paying for house repairs (not decoration)?

Your family need to take tax advice and legal advice ASAP.

I'm a tax advisor and this sounds very much like a gift with reservation of benefit. Unless he's been paying your mum and her sibling a market rent for all these years then the house will still fall into his estate for inheritance tax purposes despite the legal ownership being handed to his children.

This is outwith the 7 year PET tail.

I don't know how much the house is worth or what other assets he has but please tell him to take professional advice ASAP.

Absolutely all of this.

your mum and her sibling can't just sign it over as it will cost them to do so even if they don't take any money. It would be deemed for tax purposes to transfer at current market value.

and also going to cause an iht issue when he dies, depending the value of his estate (including the house) if he hasn't been paying a market value rent.

It sounds like he transferred legal ownership of the house king before future care costs were a consideration.

‘If’ bring the operative word. He’d have a hard time proving it wasn’t freely given.

Yes. The 7 years taper relief is for gifts in general. That still applies. However, HMRC reserves a right to charge IHT anyway, if they think the giver has reserved a beneficial interest (they’ve actually kept the gift in all but name)

You have no idea what went down between them. He left your grandma to raise 5 kids alone, did he pay maintenance? Care for them at all to give her a break from the relentless life? I would really urge you to not get involved.

If he wanted to take legal action, he could potentially argue that they hold it in trust for him (particularly if he only transferred to 2 out of 5 kids, with the expectation that they would share with all the siblings). It would be expensive, liable to tax if successful, and would end any family relationships.

Sounds like he tried to “hide” the house so that he wouldn’t have to cover his (potential) care fees and inheritance taxes. And it’s come to bite him.

Even if the gift is over 7 years old? (interested, not doubting you)

Does that mean they could end up paying IHT and CGT?

We had a slightly similar situation with my dad's older brother. Not exactly the same but there are similarities. When his wife died, he promised his house to his grandson, who was his son's only child. He then remarried and decided to leave the house to the new wife. His son's wife (the grandson's mother) asked my dad to interfere and ask him not to change his decision. My dad told her at the time that he'd do no such thing because it was his brother's house, his wife, his life and his decisions.

In the end, the house did go to his second wife, who ended up living with him for over 15 years before he died. She was the one who looked after him in his old age so to speak and buried him, and my dad felt it was fair for her to stay in his house after his death and keep it.

I understand what your mum feels and your granddad may well leave her and others something but 25 years is like a lifetime and if he has new family, they can't just be kicked out of what now is their family home with "2 years to get on their feet". I don't think it's right.