inheritance, buying houses and gifting...

[JazzAnnNonMouse]

DP's grandfather passed away recently, his estate is left to his only daughter (DP's Mother).
DP's mother is in the process of doing a variation of will so that her two children can immediately inherit without it having to go through her estate (she's not wanting to gift to us because of the 7 year rules...) She's planning on buying a property for both DP and his sister as an investment opportunity.
Because of our imminent arrival (19 weeks pg) and wanting to move ASAP, we are looking to buy somewhere that needs some work doing to it over the summer and will be ready for us when we need it.
The money from the estate is currently in probate and won't be released until late May (they think). There is however accessible money from another inheritance but if DP's mother chose to buy the property this way (faster) there might be some taxation issues and the 7 year gift thing.
I was wondering whether it would be legal for DP's mother to buy the house with her other inheritance and for us to "buy" it off of her for a minimal amount (such as £1) and either her not do the variation of will on our part or whether to give her our variation bit when it eventually comes through.
Hope this makes sense... it's all a bit complicated!

You need a solicitor and an accountant to advise.

Is the estate large enough that it would be eligible for inheritance tax? Sounds so, from what you've written.

Accessible money from another inheritance - left to who? Your dp? Your dp's Mum?

Be aware that some countries have a 'generation skipping tax' for gifts and/or inheritances, which is at a significantly higher rate - ie, money passed through to your dp would be taxed at a higher % than money left to your dp's Mum.

she could loan you them money to buy the house, then you could repay her with your inheritance when you get it

ok, the other inheritence is left to DP's mum from another relative.
If she loans us the money and we repayed her using the money from the variation of will would that be worse in tax than waiting for the inheritence directly to us?

can anyone suggest a good route?

A good route would be to see a solicitor and get professional advice from someone in possession of all the facts. Yes, it will cost but ultimately it could be a lot cheaper than the alternatives.

If the monies involved are sufficient to mean that IHT is a concern, then some quick advice from an accountant/solicitor would be the most cost-effective way to deal with this. The fees would be tiny compared with the sums involved.

Sounds to me (former solicitor, but not a probate expert) that your suggestion would not work. The purchase of the property at an undervalue would be construed as not "at arm's length" and an attempt to get round the IHT rules (as in fact it would be).

So, either you wait for the deed of variation to take effect for the grandfather's estate or you take the gift from MIL now and hope she lives for the seven years to ensure that IHT is not payable on the gift.

In any event, sounds as if the sums involved warrant expert advice.

we have a family solicitor dealing with the estate but he's quite hard to get hold of so I just wanted some opinions from you lot (thought you were mostly lawyers etc )
The amounts (as it turns out) won't be liable for IHT rules as one trust was set up by someone else and MIL's father never touched it.... also because of the variation of will for DP's sister it means that MIL's 'estate' will be less than IHT if she does die in the next 7 years.
I know its a bit cheeky to try and dodge the tax but it's worth a try?!

Can't see what's wrong with what annoyingorange suggested. That'll work. Don't try and over complicate it.