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

Out of interest how would this relationship /benefit be identified for IHt purposes? Who in the process would declare (to whom?) that btw that man didn’t pay any rent so had a beneficial interest?

A CGT of 18% for basic rate taxpayers is hefty or 24% for higher rate payers. That’s the ‘bill’ the daughters have to pay if they transfer the asset back to their father who at the end of the day was trying to avoid paying tax/care home fees. Is he going to be able to fund that asset transfer? Why should his daughters have to pay for his mistake?

You can register an interest in an asset you don’t own. She was never on the deeds and the father hasn’t owned the property for years.

I assume there is no rental contract, nothing in writing with regards to a tenancy agreement.

Obviously I mean you can not register an interest in an asset you don’t own. It would be like me trying to register an interest in a holiday property I rented.

I don’t think they should give him the house back, sounds like it was paid off before new wife came along and if he gives it to her thinking it’s her home she’s not going to then leave it to all his kids is she, her one child will inherit a house and leave all the others with nothing.

----All the posts going on about how the grandfather put it in the children’s name to avoid tax. I would hazard a guess that it’s not as sophisticated as that. I reckon it was a council house bought for a pittance and the children funded some or all the purchase price to save on rent. This was very common 30 years ago

If a transfer of property wasn’t declared to HMRC, they would be on it like a vulture on roadkill.
They scan the Land registry for changes of ownership, it might take a few months but they would find out.
Their new AI scans EVERYTHING, bank accounts, Paypal etc. savings, social media.

It no longer takes actual people to do the searching, only when something dodgy flags up do humans step in.
It’s a total game changer for sniffing out Tax evasion.

This depends on how long ago the ‘transfer’ took place:
“IHTM04071 - Lifetime transfers: introduction to gifts with reservation of benefit
Why the gift with reservation (GWR) rules are necessary
Most lifetime gifts to non-exempt beneficiaries are Potentially Exempt Transfers (PETs) (IHTM04057) and so become chargeable only if the transferor dies within seven years of the transfer.”

I’m fairly sure that it can’t be an exempt transfer - no matter how long ago the legal transfer of ownership was made - if he’s continued living in the house without paying market rent and thereby treating it as his own in all but name. It’s common sense: if you could do this and just survive 7 years, then everyone would be doing it. You can transfer your house to your children and have the gift be IHT free, but you have to survive 7 years AND if you continue to live in the house, you have to pay market rent. Otherwise, you’ve reserved the benefit of the house to yourself.

“Most lifetime gifts to non-exempt beneficiaries are Potentially Exempt Transfers (PETs)“

Yes, because most people that make lifetime gifts have at least taken legal advice, and as a result are informed enough to know not to do what OP’s grandfather has done.

That he continued to live rent free in the property after the transfer, aka benefited from it, means that it won’t be a PET, no matter how long ago the transfer.

To avoid having to pay IHT on it he would have to either move out in order to start the seven year clock, or pay a market value rent (adhering to all commercial rules and regulations) for a period of at least seven years directly prior to the date of death.

It's not in his will. He signed it over years ago. His most recent wife could have a good reason to challenge this but I'm no expert.

We are in a similar situation. My grandad put the house in a trust. So we have inherited it, however we dont get it until his partner dies. It means she gets to live in the house, and we still inherit it later on so she cant leave it to her children. Maybe that could he a compromise?

What an awful situation. I feel incredibly sorry for him. He does not need this at his age, the poor man. No question. MORALLY the house should be signed back to him to respect his wishes, particularly as the children are comfortably off.

Your right. What pigs they are!

That's rich! Gift the house and pay rent to live there!

So my Dad gave me and my brother the proceeds from one house so we could buy one for him to live in. I pointed out this could still be seen as deprivation of assets if the council asked, but he lived on for a number of years. My brother had a difficult relationship with his wife, but they remained married. He then died of liver issues. His wife inherited half the house. She had absolutely no issue with trying to throw dad out- he could buy a small flat apparently using half the proceeds. He died before she got the chance to do this (and did not attend his funeral). However, it is a cautionary tale. None of us can see in the future and the house you live in may pass via a will or a divorce to someone you do not get on with. They can also force a sale, which again surprised me.

What a mess someone will end up upset as everybody has an opinion and feelings about it they can all be valid as well I just hope the two eldest do split the money between all the children in the end but your mum shouldn’t get anything and his current wife should get a share as you said no one visited him or cared for him but she is with him , I don’t think lawyers can do anything the house isn’t actually his anymore it all lies down to the brothers and your mum’s morals .

We had similar issues in our family. Once there’s second marriages and step children it’s really hard to be fair to everyone. Usually it goes the other way though in my experience.

As a single parent I would want my children protected and provided for. It sounds like he made a big mistake signing the house over. He should have split it equally in his will. Did his wife not have a home of her own when they met?

In your situation your grandfather's partner is very likely to die before you and the house will be yours.

In OP's case it's the grandfather's children who own the house and as his partner seems to be very much younger, possibly younger than his children, she could well outlive them.

Why not let his wife live in the house first the remainder of her lifetime? 2 years is nothing after a 25 year marriage. If the house changed ownership I presume it was done legally via solicitors so cannot easily be undone if at all. But he needs to take legal advice. There will be capital gains tax to consider regardless. This is quite a tricky legal situation. Did his wife contribute to costs of the house? I know of a similar situation but house put in trust not gifted. That has its own complexities

Presumably because she'll be around the same age as the owners and might very well outlive them.

When you say put it in their names - how do you mean? I.e did he gift it entirely or is he still on the title deeds?

Not at all. That’s the only way he could remain living there without the house being considered part of his estate upon his death.

That, or they evict him and hope he lives another seven years.

Well the point is that if nothing changes and you just still live there for free then you haven't really gifted the house.