AIBU - inheritance sad story

[whattodo1113]

I’m going to break this down as easily as possible.

my grandad who is now 86 had 5 children. (The eldest is my mum)
he split up with my grandma when the children were young.
all the children are now obviously grown up in their 60s.
all of them have wife’s / husbands and their own children. They ALL live good lives and have done well for themselves are by NO means hard up.

my grandad has worked hard all his life and paid his house off etc and was alone for a long long time with not much quality of life. He then met someone and married her and had a daughter later on in life when he was late 50s. This child is grown up now too. He is still with his wife now and has been for 25 years ish. Sorry my numbers aren’t the best and it’s not really relevant.

the whole family welcomed wife and the new child and I must say she’s always been lovely she’s a lovely woman. The daughter they had I loved and still do very much. My grandad has always been a good grandad to us. I have fond memories with him and I love him loads.

so here’s the crunch….
before he met his wife he put his house in the 2 eldest children’s names (my mum included) his train of thought was if anything happened to him or he got ill etc they’d have that house and all those things and he didn’t want it to end up in a charity or whatever I don’t know.

3 years ago as he’s getting very old now he asked them to sign the house back to him as his wife has lived there with him 25 years now and it’s her HOME and their daughter lives there too. She works part time. He’s obviously planning not being here anymore
they have refused him the house and have said when he dies she can stay for 2 years to get on her feet and find somewhere then they will sell it and split the money between the 5 children.

there argument is he left when they were kids and this new child got more of him than they did growing up.
I personally think this is very revengeful of my mum and greedy and not morally right? My grandad is very depressed and cries and I just hate that this is how the end of his life looks. He said his wife has been there the most for him and loved and looked after him and she’s gonna be left in a mess when he goes and she’s doesn’t deserve it. Which I agree.

I’ve told my mum it’s his house. He paid for it. He worked for it. Give it him back. Am I being soft ?? What do you think?? I just personally feel disapointed in them.
may I add nobody visited him often or cared to see him much but they want his house and money?

they’ve all said wife will have his pension that’s enough. Which is about 500 a month I think.

I just can’t stop thinking about him and I’m the only one in the family who has said how he’s being treated is discusting. They think he’s cruel taking the house back but at the end of the day he bought the house and his life situations have changed now and all the kids are so well off with their own businesses etc they don’t NEED it. Xxx

Why can't he just change his will? See a solicitor.

Because the 2 eldest children are basically the home owners now. He’s tried x

I wonder whether the gift of the house stands up (not a legal person).

If he has continued to live there rent free all this time it could be argued that it was a gift with reservations or something?

If you do this kind of thing later in life to avoid care fees they come at you for it.

However if not then he gave the house away, he sadly no longer controls who gets to live in it.

But that's not how a will and inheritance works, in the UK at least. Has he legally signed over the house to them?

He needs to see a solicitor.

Your Mum and her sibling would face a Capital Gains Tax liability if they gave the house to him. The percentage varies depending on her earnings, but it is quite a hefty bill. He is naïve and unreasonable to expect that of them.

Broadly speaking: a gift is a gift. That’s the whole point. Your Mum and her sibling should perhaps consider offering more than 2 years, but that is their business, not yours. You weren’t there when the gift was made either.

Lastly, if your grandfather is living in it, he should be paying rent. Otherwise your mother may face an inheritance tax bill when he dies.

The of worship stands up, but it may be subject to IHT due to beneficial use.

*ownership

The house isn't the Mum and siblings main home, so will surely be subject to Capital Gains tax when it is sold.

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.

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

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

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.

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.

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.

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)

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

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

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.

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.

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)?

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.

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.

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

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.

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.

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?