Buying house with new partner and inheritance

[lalahouseq]

Wondering if anyone can help. I'm planning to buy a house with my new partner, both have adult kids from previous relationships. Plan is to own as tenants in common and get solicitors to write a doc stating that whichever of us survives longer can stay in the house until death or we choose to sell.
Will obviously talk to solicitor but I'm wondering how this works from an inheritance tax perspective. If I die first, I don't want my partner to have to move. But if my kids have a 50% stake in the house, does this have any implications for them in terms of FTB status, tax relating to second homes, or anything like that? How would probate work to wind up the rest of the estate?

I agree that some people are far too hung up on the relationship status and are making snarky comments.

I think that the only way in which the relationship status is potentially an issue is that it affects how inheritance tax works and that could be disadvantageous to the children when they do eventually come to sell the property after the death of the final partner.

It is something that the OP should consider.

Passed down the line? Say what? The OP has inherited and wants to use that money to buy her share of a house? You seem to think what OP should do I just pass it on without using it in her lifetime. How does that work? So her dc don't use it and just pass it on to theirs? You are very weird.

Just to clarify with the inheritance tax issue with the sale of my mums house when she passed away. It wasn't the case that I inherited 100% of the house and then handed over 50% to my stepsisters - I only inherited 50% of the value of the house and my stepsisters inherited the other 50% through the trust, so there were two completely separate potential inheritance tax liabilities. Although the sale price of the house was just over the inheritance tax threshold, the half shares were below the threshold.

@Betterbear in any case the OP is not spending money she inherited

She hasn't inherited. She is debating how to protect/set up an inheritance for her children in the future.

Speak to the solicitor first, rather than trying to think it out first. We didn't have any idea what options there would be, so keep an open mind and go and talk to one.

Yes I agree! There’s no inheritance being used to buy the house and it’s not a new relationship, but the title suggests both.

The biggest issue I see with this, is that your/ your partners children have to stay in touch and in the loop with their deceased parents partner until that partner dies which could be years. During that time they are responsible for half the maintenance bills- unless you state otherwise, but how will surviving partner feel about covering for say, a whole roof, when they only own half a house, how would the deceased parents children even cover half a new roof if they’ve their own house to manage? Or any number of even smaller maintenance jobs that need constant dialogue and discussion. Even if you write that surviving spouse has to pay all bills in a trust, what happens if they decline in health and stop being able to take care of house and value falls due to poor maintenance? What if the surviving spouse wants to move years later- how will the trust deal with that? What if they marry later post-loosing you? The children would need building insurance, they’d have to notify insurance company they don’t live there so may find it expensive. As part owners they’d have to work through council tax complexity as non residents in a property that’s not vacant. So many potential issues, aside from you forcing them to maintain relationships with their dead parents partner. And, because of that enforced continual contact, by doing that you may also be forcing them to take on care responsibilities for an aging and frail person they have no direct relationship to.

add to that they may, as far as HMRC are concerned own a second home. You need to consider capital gains not just IHT. when they finally can sell the asset on death of both parties, they will be charged IHT on difference of their share at point when it was valued for your probate vs sale value, maybe 10 or 20 years down the line. Capital gains allowances have been slashed and it is a high tax. Would what’s left after your iht, their capital gains and half house value really make it worth taking on that burden for years?

my dad is in this situation with a partner and no marriage ( not our mum, met her after mum died). He tried to create a stupid trust like this, that would have meant me and siblings needing to maintain contact with his new partner for the rest of her life. Whilst I don’t dislike her she’s not someone I’d be wanting to stay in touch with or bound to because of a stupid house after my dad dies. We just refused to let him do this, said just leave it to her. He did that. he’s now deemed mentally incompetent due to dementia and in a nursing home . She’s made promises that after she dies shell leave it to us ( she’s way younger than my dad) but frankly I doubt that and she’s assuming dads nursing costs won’t piss it all away anyway ( he is sole tenant so she’s left herself wide open to having no rights anyway but that’s another stupid story of theirs of burying their heads in the sand. She actually has a home of her own in another country so she can’t even claim she’ll be homeless 🤦‍♀️. ) .

whilst with good legal advice you could easily set this up, as a child of a parent in this situation I would run a mile from the burden this would place on me

Don’t understand this. IHT is paid on the entire estate of the deceased, it is not a tax paid by the beneficiaries ( tax paid by executors before distribution to beneficiaries).

but maybe I’ve missed another thread where it was in trust and your mum wasn’t married to step sister parent…in which case yes each non married parent has only their portion of iht due on each of their deaths.