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

the new wife should register and interest in the property. This might stop them selling it. She should be allowed to live there for the rest of her days. 25yrs is not insignificant.

God so often clients come to see me with the bright idea of transferring their main residence in their lifetime. It’s almost always a terrible idea for so many reasons. No reputable solicitor would recommend for the average family.

She moved into a house that she did not own 25 years ago. Her partner also did not own it. She had 25 years to consider how she would house herself if the owners sell the house. Why should she get to live there the next 25 years (rent free?) - possibly outliving the people that do actually own it?

This is only an option if DGD has a legal interest in the property, for example if he has a proper formalised tenancy. Do we really think that's happened here?

Grandad is reaping what he sowed. He was an adult of presumably sound mind when he did all this.

He doesn’t own the property so she can’t do this.

She could do it if he were a tenant as well, though I suspect that's a moot point since nothing about this says formalised legal agreement and rent. But yeah, marriage to someone who has no legal interest in a property doesn't create a legal interest for the spouse either.

I’m not a tax lawyer or accountant but I’m fairly sure that transferring a house into anyone else’s name(s) and continuing to live in it without paying market rent makes it a Gift With Reservation Of Benefit for tax purposes and therefore the property is liable to IHT on the death of the donor.

Someone raised a very valid point

The house was purchased and paid for during the first marriage therefore it would have belonged to first wife and father.

Seems unfair to give the house belonging to father and first wife to second wife in full. Maybe the transfer to kids was something agreed during divorce to ensure if either dad or mum remarried the kids wouldn't lose their inheritance to a second family

A friend of my MIL's ignored the advice and signed their house to their son. Said son then ended up in a shit load of debt and in the middle of a very, very acrimonious divorce. They lost their house when they were in their 80s. The wife is convinced the stress and move hastened her husbands death

I’ve looked it up now and under section 103(3) of the Finance Act 1986, a Gift With Reservation of Benefit - regardless of how many recipients have taken legal ownership of the property - will be liable to IHT under s.4 Inheritance Tax Act 1984 on the donor’s death. I don’t think CGT applies unless there is an increase in value between the date of the death and date of subsequent sale of the property.

Your grandfather played stupid games, and now he's winning stupid prizes. If his youngest daughter is 25 she shouldn't come into consideration, and if his wife's been living rent free and had no claim to the house, she should have organised her finances appropriately.

Unless she didn't know about this arrangement, in which case I sympathise a bit more - it's a bloody stupid thing to have done so you wouldn't expect it. But like... where is her pension? Did she work? Was she his unpaid carer? That's unfortunate but your granddad's fault/problem to sort out.

I would expend your energy elsewhere tbh.

Once you’ve signed your house over you are so vulnerable. Plus if you live in it there’s no iht benefit. Forget avoiding care home fees it’s obvious deprivation of capital. And you lose your iht main residence allowance. It’s a daft thing to do.

he signed over the house for good reason at the time. I think that was the right thing to do. He can’t expect them to give it back. I think your mum is reasonable. He & wife should have worked something out over the last 25 years.

You're having a lot of emotions about what is quite a complicated tax & legal issue. That's a complete waste of your time. It's also not your affair, this is between the two giftees & the father who left them & their three siblings when they were kids. Shoving your oar in advances nothing.

I know that, but They’re not giving the house back, and it still keeps coming up as a concept on its own, ie that itlll be due anyway when the owners sell. Which they probably are a bit sore about, but probably don’t care all that much anyway vs a free house

Yes - I don’t think it is worth opening that can if worms.

Don't be so obtuse, i wasn't suggesting OP take the advice herself.

She is entitled to take an interest in a family dispute. And the best way to do that is to advise them to take legal advice.

To be fair, the OP says the GF has already “tried to get it back” which presumably involved consulting solicitors and People on this thread who have said they are solicitors have also said that there isn’t anything to be done.

even a basic consultation would cost hundreds of pounds, it’s easy to advise and maybe even easier when it’s not your £400 going on it? 😂

Iht is still a major consideration though as it's a gift with reservation of benefit if the grandfather hasn't been paying market value rent so from iht perspective would still be in his estate although he no longer owns it.

a big mess and a cautionary tale that professional advise should always be sought before anything like this is done to ensure full
knowledge of any potential pitfalls etc

Stay out of it, OP. Step-granny's had a good run: one child, part-time work and free housing for 25+ years? We should all have such easy lives. She can rent somewhere else, and if she can't afford that (why not? She's had enough time to build up her own financial independence), there are benefits to help her. Or she could rent with her daughter, who is well into adulthood and presumably working. Or, if the two owners of the house do the right thing and split the proceeds six ways, that could be a deposit for the daughter to buy. Why on earth should your mum let her take everything and then leave it to her own child, and the other five kids get nothing? (If your mum and her sibling don't share with the three younger ones, that's shitty). Two years is a generous amount of time to get things sorted.

Granddad was trying to dodge tax / care fees - he's no saint. What to you mean, he was worried the house would "go to a charity"? A house goes where its owner wills it. Someone's been bullshitting you. But it doesn't matter, because you're not involved. Stop thinking about it.

I've been kicked out of places I was renting twice. If you don't own your home, it can happen. Step-granny doesn't have some special right to be exempt from that sort of thing that the rest of us don't. And if granddad lied to her and she didn't know the situation, he's been disgusting, not your mum.

It's two different scenarios.

you are correct it's a gift with reservation for iht.

but if the current owners transferred it back to their dad there is also a cgt charge, due within 60 days even if no money changes hands. That could be very hefty and with no cash from the sale to pay it.

Yes isn’t it amazing the difference in perspective it gives you growing up as one of 5 kids with a single mum, especially some time ago. Sometimes ‘nice’ is a privilege that really means ‘have never had tough times and don’t spare a thought for others who have’

I suppose they might think of how they saw their mum struggle and they themselves lived through tough times and their dad didn’t turn up and didn’t help as he didn’t care? Seems quite possible. And despicable of him, don’t you think?

Well they aren’t going to by the sounds of it so that’s entirely hypothetical! But they won’t end up with as much as he or they may have intended. It’s a sad situation all round and I share the OP’s view that it’s morally wrong. However, if I were either of the 2 legal owners I think I would find it in my heart to say that the property should be sold and its value after IHT split equally between ALL of the OP’s dad’s children - his wife hopefully could be housed with her daughter, or the daughter could split her share with her mum.

This sort of tale is a salutary warning as to why taking legal and tax advice before making provision for your dependants on your death is always sensible. For anyone interested, @mumblechum, a longtime poster on MN, is a very good will-writer whose services I’ve used myself (I am a lawyer).