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

Because he doesn't own the house any more and so can't leave it to anyone in his will.

Not always
My Mums partner has the right to stay in her house for life if he chooses and now she has gone it has put all of us (him included) in a difficult situation
The House is not suitable for his needs but he won't move elsewhere that would be and if there had been a timescale in my Mums Will we could have gradually transitioned him somewhere better. As thing stand he will either die there lonely or end up in crisis and be put somewhere in a hurry.

Hi @Praying4Peace I would like a better understanding of why you think that. As I said upthread, the grandfather decided to make the gift of his house 25 years ago, and OPs mother may well have structured her retirement around this asset? And potentially take on a significant CGT liability?

Why? He abandoned her mother and five kids.

@whattodo1113 - you should have posted in LEGAL MATTERS rather than AIBU. Most of the ‘advice’ here is misleading or downright wrong.

Your grandfather has messed up in a big way, and I doubt that there is an easy way of fixing it. It definitely wouldn’t be as easy as your mum and the co-owning sibling signing the house back to their father.

The grandfather and the current owners of the house need qualified legal advice, preferably together. However, if they are reluctant to do so, you should urge your mother to consult with a solicitor on her own.

Burying her head in the sand would be very risky. As has been pointed out, as things stand, there will be CGT and IHT to pay when the house is eventually sold. Given it has been 25 years, the increase in value could be huge.

And that sounds like the situation if as it seems, GF gave away the house and continued to live there rent free.
It sounds a right mess and as if he was not well advised all those years ago. People talk about putting the house in their name' as though it was a technicality but it isn't.

But an element of truth.

He is the one who has made the mess.

The house might have risen in value by 600% since 1998.

If it was worth £100k then and it’s worth £600k now and the sons are higher rate tax payers there will be a 28% CGT cost when if it gets transferred back to GF.

That’s a CGT bill of £140k - is GF going to pay this? I assume not. Remember CGT has to be paid within 60 days of the gain being realised (date of transfer/sale).

If it does get transferred back to GF his spouse will inherit it without IHT and later on leave it to her daughter.

GF is way out of line, you don’t get to ask for gifts back. He made his choice and now it sounds like someone has suddenly realised they are going to be homeless and not inherit when he dies.

Yup! An absolute mess.

1. if they do give the house back, as he asks they’d have to pay CGT.
2. If they don’t, his estate will have to pay IHT to be granted probate (even though it’s already theirs due to his beneficial interest)
3. This IHT bill will come directly from assets in his name that are probably being left to his wife.
4. If there are insufficient funds in his estate, then liability falls to the recipients of the gift (the owners of the house).
5. If the owners of the house don’t have the funds to pay the IHT bill, they will have to borrow it from the bank and repay with the proceeds from selling the house. This will usually be subject to interest after a grace period of up to a year.
6. consequently, there is a real possibility that the siblings who own the property will have to evict their step mother to pay the IHT bill.

If the new wife was granted lifetime residency she could easily outlive some of the children inheritors as she is of the order of 20 years younger than the grandfather.

I can't believe something that important was kept secret, unless they never saw the adult kids. I know if it was my dad marrying a much younger lady I would make sure she knew my dad's situation in case he had been lying his arse off.
I have friends in this shit because they wanted to be supported by older man and now have no financial security or pension.

With regards to IHT op mum is not inheriting it, it already belongs to her. CGT yes and that will be covered when house sells.

They had 25 years to ensure savings, pensions and life insurance, he was already nearing retirement, if they haven't then only themselves to blame or did he think he would just fuck his kids from first marriage a 2nd time.

At the end of the day op it's none of your business.

I am backing OPs mum.

I see so many stories of where the man in particular remarries and everything goes to wife number 2. Often wife 1 put in to that house or put her inheritance in to it and it all goes to wife number 2 and her descendants.

Let the first family benefit from the house and the second family can have what’s left.

If you are divorced or widowed you should make provisions for your first and frankly original family. If the gf had his way everything would go to wife 2, very cliche

There seems to be a lot of this story missing....whap happened to the GFs first wife and what sort of financial settlement did they have? Was the signing over of the house part of that settlement? Why has the new wife and the GF not done anything over the past 25 years to sort out accommodation? They have presumably been living rent free for 25 years - what have they been doing with all the money they have been saving? Why should the new wife and new child get everything? It sounds like 25 years ago he made a financial decision that he was happy with and he gave his house away as an early inheritance. A long time has passed since then and surely he has had enough time to plan for the future with his new wife and family. At least he has a pension that he is leaving his new wife and I presume that she is still working even though it is part time (lucky her!). I would stay well out of this OP.

to serve a section 8 you need all the paper work - including a gas certificate, electric certificates etc from when the person started living in the house - which they clearly will not have. Thats the point, how can this woman be evicted? its a mess and possibly she can stay in the house without being any way of making/forcing her to move

As someone else pointed out - this woman could outlive the two people that own the house

(1) Your grandand should not have given away his house if he did not want to give away his house.

(2) IMHO your grandad did 100% the right thing when he left - he looked after his family rather than risking them missing out on his assets later on as a result of the second family he would never have had had he actually dedicated himself to his first wife and 5 kids

(3) The second wife presumably knew all this was coming or was very naive / failed to ask questions (or your grandad is a massive liar).

Well if he’s been living in the house without paying rent it will be in his estate for IHT purposes anyway, so that would reduce the value of the estate in any event

This could be bad news by the sound of it OP, and there may be nothing much you can do except spare GF knowing about the likely tax complications, and assure him that you will help his widow find somewhere to live if necessary.

Yeah this. My arse did he sign it over so that his things wouldn't go to charity. That's what wills are for. I'm afraid this is hard luck.

I hope he has been honest with his wife.

the house is owned by two other people, so it will not be in the grandfathers estate for IHT purposes

the house will be up for CGT which is 40% of the value difference form the gifting of the house until its sold

Not sure where you get your CGT rates from. Gains on residential property are 18% for basic rate income tax payers and 24% for HRT payers. Both siblings will have use of their £3,000 annual exemption too.

Where did the grandmother and her five children live when this prince among men had left them?

Was this the original family home? Was the grandmother a part-owner? Is the grandmother still alive?

I would not be surprised if there is more to this story than meets the eye.

Unless the grandfather has been paying market rebate rent then the house will be subject to IHT when he dies, even though he gave it away more than 7 years ago. This is because, by living in it, he has retained a beneficial interest in it. This IHT liability will fall initially on his estate, not on the current owners. The current owners will not be pursued unless there are insufficient funds in his estate.

presumably she is considerably younger than the grandfather - may even be younger than they children who own the house. They would therefore still be giving away their inheritance as may die before her

Maybe you could pressure your mum into dividing the proceeds of the house between all his children and let his wife live there 2 years and the pension. That would seem the fairest thing to do.

Why? This entire legal and taxable catastrophe was the grandfather's doing. The OP's mum and uncle will be liable for CGT should they try to give it back to the GF, and with the increase in housing prices since he signed it over, that's going to be a hefty bill.

In addition, by trying on the sly to avoid IHT by signing his house over, the GF created the stupid situation where he didn't then pay market rent, so IHT will still likely apply. Unless mum and uncle have loads of savings sitting around, this will force the sale of the house sooner, rather than letting his second wife live there.

He created this mess by not paying for tax/inheritance advice way back when, for trying to emotionally blackmail his elder two into giving something back they'll have planned on for decades, and by not planning with his second wife for her future.

The OP should stay out of it.