Inheritance- property ownership

[Copenhagencatty]

My elderly DM lives alone in a large house. She is still fairly independent and in good health for her age. In addition to her home, she owns two other houses which are rented out. She is not interested in downsizing or moving into sheltered accommodation until absolutely necessary.

I have 3 siblings. Under the terms of DMs will, which she shared with us all openly after our DF died, we inherit one house each.

DM’s properties are as follows:
Property A - her home - worth approx £2 m - earmarked for sibling 1
Property B- rental worth about £600K - earmarked for sibling 2
Property C -rental worth £650K - earmarked for sibling 3

Under the will, the properties will be independently valued, and DC 1, who inherits the more valuable property, will pay equivalent amounts to the other to siblings to make it even. There is quite a lot of cash/shares in the estate, so they may be able to pay these amounts without selling the house or other assets.

Recently, DC2 (who lives in another country), considered moving back to the country where DM lives to be closer to her. They mentioned living in the house that they will eventually inherit as the tenant recently moved out and the house is currently empty. DC1 & DC3 both agreed that DC2 should probably pay Market rent - although DM doesn’t need the money, it seemed fairest.

DC2 applied for a job in the country where DM lives, but this recently fell through so they have postponed the move for now and the property has been rented out again.
Despite having an agent to handle the tenancy, DM got quite involved in preparing the house for reletting (unnecessarily so perhaps) and mentioned that she found it stressful.

DC1 is concerned that DM has too much on her plate and has suggested that DM signs over the houses to the three DC now. This would mean that DC2 & DC3 can assume responsibility for the tenants, receive an income (Dm does not need the income) and DC2 could also live in the house rent-free if they decide to move back. This seems a fair arrangement and DM will no longer be responsible for managing the property taxes etc. The U.K. issues around deprivation of assets etc would not apply.

DC2 is not happy with the idea.

YANBU - DC1’s suggestion is a good one
YABU - DC2 is right to object

Despite the poll, I am actually DC3 and feel caught in the middle.

It's entirely up to your mother. None of you have any right to agree or disagree with some random plan that one of you has dreamed up for your mother's property.

Mum has too much on her plate so I’ll just help her out by relieving her of this valuable asset? Cheeky fucker!!

They’re completely removing her sense of agency and control. So unreasonable it beggars belief.

Does your mother know of this suggestion? What is her view, does she think it’s a good idea?
For what reason is DC2 disagreeing?

You need to go and talk to an estate planner and get professional (correct advice).

In all honesty with those kinds of assets she needs to speak with an expert on estate planning and also ensure her will is rock solid because it's got red flags at the moment, relying on one sibling to compensate others and assuming you all even want the properties.

I don't think it's a good idea for your mum to sign away her homes while she's still alive. Puts her in a vulnerable position.

Sounds over complicated to me. Why can't her estate (whatever that consists of) be sold and the proceeds split three ways when she passes away.
That's the fairest way surely??

Are there three or four siblings?

The only important question is what does your Mum want to do. The rest is just noise.

It depends what DM thinks.
She should seek the advice of her accountant.

If she decides she wants to give the houses to C2 and C3 now then they will have to deal with that and C1 will obviously enter into a different arrangement and help DM with maintaining her home.

Maybe just leave her alone until SHE'S ready to have the conversation.

Siblings are already arguing over it so you need to get estate planning advice from a proper estate planner, not an accountant, as soon as possible. Take the will with you as it is possible that changes need to be made and/or the properties written into trust.
Not all solicitors who write wills are experts in estate planning. With a large estate like this it is worth getting the legal stuff right.

I think it's none of DC1's business. Whatever your mum and the beneficiaries want to do is the right thing to do. I can see why DC2 who lives abroad is not interested in managing a property right now. They might even decide not to move back to the area.

If your DM can't manage anymore, she can always sell the houses.

It is your mum who needs to get the advice. Unless she intends to leave a mess for you all to fight over.

Jesus OP.

What a situation to be put in. You must be devastated. Angst ridden, inconsolable.

🙄

Sounds like it was already sorted before they started trying to divvy up the spoils before she’s dead.

DM is mostly happy to do whatever her accountant & DC1 suggest. DC1 is frequently involved in DM’s finances, often at her instigation because she trusts their opinions and advice.

She has a lawyer she likes who drafted her current will but lawyer is close to retirement and DC1 has suggested appointing a new lawyer . Her accountant has recommended engaging an estate planner.

DC2 objects because properties in the area are rising in value quickly in comparison to the other 2 properties. If DM lives for at least another 8 or ten years (hopefully!) property A will be worth a lot more than it is now. DC2 seems to think it’s some sort of scam.

I (DC3) don’t feel comfortable with the discussions in general but want to do the best thing for DM, whatever that is.

I have 3 siblings.

The whole thing seems a bit unfair if three siblings get a house and the fourth doesn't.

Edited as cross posted with response from op

Sorry that was a typo - there are 3 siblings, me included.

I was trying to write it in a neutral way and got muddled 🤯

Wouldn't it just be easier for the executor to sell the houses when she eventually dies then just split the money, it seems unnecessarily complicated and is already causing bad feeling and shes not even dead yet.

She should think really carefully before signing over properties in her lifetime there are considerable tax consequences both now and on her death.
for example to 2 x rented out properties, she would be liable to pay CGT on the increase in value. Especially if she has owned them a long time this could be very significant. Does she need the rental income from these properties? She needs to be confident she does not before giving them away. The CGT would be due now. If she dies within 7 years of the gift the value would also be included in her estate. So it would be taxed twice, CGT now and IHT on death. If a property is gifted on death there is a tax free uplift for CGT.

The property she lives in should be covered by PPR for CGT but it is not generally a good idea to gift the property you live in. Everything might be a lovey relationship now, but she would be losing her security in her home. If she needed care this could be treated as intentional deprivation of assets.
if she continues to live in it without paying rent then for IHT purposes when she dies the house would still be included in her estate for IHT even if she has survived 7 years because it would be a ‘gift with reservation of benefit’ (GROB). So there would be not IHT benefit in the gift.

your mothers security and protection should be the primary concern. If she is struggling to manage the properties then if she authorised the agents to deal with the children this could be a sufficient solution.

This is not a straightforward situation and she needs expert advice from a STEP qualified solicitor specialising in estate planning. It sounds like there is plenty of cash to pay for this required advice.

“DC2 objects because properties in the area are rising in value quickly in comparison to the other 2 properties. If DM lives for at least another 8 or ten years (hopefully!) property A will be worth a lot more than it is now. DC2 seems to think it’s some sort of scam”
But if as per the will all three properties are to be valued at the same time (even if they’ve been signed over early) and child 1 compensates the other two for the difference in value of the houses, then it will still all be fair, just child one will have to hand over more cash to their siblings to compensate for the increased value!

Your mother (if she wants to do this) needs proper professional advice.

If your mother retains ownership of all her assets until her death there is going to be considerable inheritance tax to pay. Could be £1m+

If your mother passes assets to you and your siblings now, then there she would need to live for 7 more years to avoid the same level of IHT.

Regardless of the tax position, if your mother has passed all her assets onto her dc, and if she has a need for care or to go into a care home, then the local authority have no time limit on how far back they can look. If your mother is already elderly then the local authority may consider 'giving away' her properties as deprivation of assets.

Or are you not in the UK?

Op said this is not UK so care costs issue is not applicable.

There’s no inheritance tax where DM lives.