Future inheritance

[Leopardprintscarf]

My father is selling his house and buying a house for me and him to live in together. The house would be in my name only, so he is basically gifting me the proceeds of the sale of his house. How would this work in terms of inheritance for my siblings as I would own all the house and my father would essentially have nothing to leave to my siblings. Could anything be done now to protect their 'share'?

Yes - your father could set up a trust with you as the legal owner and trustee for the beneficial owners - you and your siblings in whatever shares he wishes to bequeath to you all. That means whilst your name is on the land registry deeds, you would hold the property on trust for yourself and your siblings. The trust could specify that your father has a life interest to occupy the property for so long as he lives/or wishes to live in it. It could also specify what happens to the property when he dies - whether you should then be forced to sell the property so as to realise the equity for you and your siblings, or whether you too have a life interest or some lesser interest to occupy.

There is a will writer who has a paid add on Mumsnet - marlow wills, perhaps she can help him?

Thank you for your quick response. How will that affect IHT? Or future care home bills? This isn't the only reason he is gifting me the money now. I hope he will not need to go into a care home and he is in excellent health currently. The plan would be that I would hopefully be able to care for him when he is older and frail.

I have no idea about IHT or carehome bills but this might help
www.nidirect.gov.uk/your-home-your-assets-and-your-care-home-fees

Oh dear - fail - that is for Northern Island and you didn't say where you are!
hmrc England www.gov.uk/inheritance-tax/inheritance-tax-planning-passing-on-property
some advice from saga www.saga.co.uk/money/experts/taxman-and-cash-for-my-family.aspx

Thanks boomboom for mentioning my advert on Classifieds.

OP, there are 3 potential pitfalls in your dad's plan, as boomboom has pointed out:

1. Your siblings could, assuming that they receive nothing under your dad's will, make a claim against the estate. At one time, they'd usually only be successful if they were dependent upon your dad at the time of his death, or could prove that he was pressured or tricked into changing his will to only benefit you, but in the last few years there've been several cases which found in favour of cut-off children even if those factors didn't apply.

1. Depending on the value of the estate, IHT may still be payable if your dad dies within 7 years of the gift to you. Within the seven years, tax is payable on a sliding scale. If your dad was widowed and received your mum's estate then his estate will be taxed at everything over £650k. If he was divorced/single then it will be taxed at everything over £325k (ignoring assets in sep. trusts such as pensions etc).

1. If your dad has to go into a care home within a reasonably short time of the gift, the local authority can seek to set aside the gift to you if they believe that it was made to avoid paying the care fees.

Don't forget CGT if the property is gifted in the names of people who do not live there.

Yes, good point Collaborate.