Inheritance of house only child

[OrangeCinnamon1]

I've been talking to DH and very worried he doesn't fully realise the implications of Inheritance Tax. At present if we ever have to pay it he is thinking sell our house and pay it with that. Problem is I don't think sales from our three bed semi going to cut it. He is an only child, we have one child , , ,parent on their own. We think assets are 2.5 to 3 x the value of our house.
The.house was bought cheaply in a gorgeous location and his Stepdad worked nights for years to renovate it, this would be the main reason he wants to keep in the family regardless of value. The issue is it is in one of those places where house prices have risen so much. Would we be able to get a mortgage to help pay off the cost of the tax?

I am worried DMIL is not very elderly (75) but they just don't talk about the mechanics. DMIL also has money put aside for care home fees.
Where on earth do we start getting advice or even practical tips how to talk about it? This worries me as we bought our house later in life , have a long expensive mortgage and ourselves have few assets.

When my DF died, our inheritance tax bill was £90k odd. We couldn't get probate until we had paid at least a third of this amount. Once we had, probate was granted and we were able to proceed with the sale. Luckily my DF had various policies which were able to be cashed in and used otherwise I'd have had to remortgage my house. Scary times.

@TryAnotherNickname

Try googling care home fees before you assume your husband’s heartbreak at having a huge inheritance tax bill. Never assume you’ll get anything.

We are not.

You’re discussing selling your house to pay tax on an estate that doesnt exist yet and may not exist following the deaths of two people. It’s really a very weird thing to do.

It’s not weird. This is the Legal section. It’s sensible to consider it.

Well the legal position is that the estate bears the tax not the beneficiaries, and it remains unwise to assume that an estate will be of a certain size when two living people still have to die before there is an estate to pay tax on.

@TryAnotherNickname

Well the legal position is that the estate bears the tax not the beneficiaries, and it remains unwise to assume that an estate will be of a certain size when two living people still have to die before there is an estate to pay tax on.

Only MIL left unfortunately.

First thing to consider is that there may be nothing left to inherit, as DM and DSF may need to use the value of the house for their own care.

If there is anything left to inherit, there is no tax to pay on transfers between a married couple, so that it is possible to roll up the allowances, so that on the death of the second spouse, there would be potentially £1m with of allowances on IHT

"everyone is allowed to leave an estate valued at up to £325,000 plus the new 'main residence' band of £175,000 giving a total allowance of £500,000 per person."

IHT would only be payable on anything above £1m.

A life assurance policy on the lives of DM and DSF would be an ideal way to pay off IHT. If the policy is written in trust, so that it falls outside the estate for IHT purposes, it would pay out on the death and so be conveniently available to pay the IHT.

The sooner IHT planning can get underway, the more likely it is to be successful.

Thanks @FinallyHere Dsd not alive anymore. Id always assumed the house would be sold in the past for fees until discussion with DH about living there. It does need looking into. We will broach subject of advice.

Look all - if I had been posting on aibu or chat I would expect this kind of crap insuating grabbiness but it is a bit bizarre when on legal issues board. A quick look at titles i can see lots of tax /money issues.
If you are from.a background when inheritance isn't usual then of course you worry about stuff.

We don't even want to consider MIL going into a care hone or dying...she has been like a Mother to me for the last 24 years, not to mention the impact it will have on Dd and DH . I (perhaps wrongly) assumed that as this was the legal board it might hace been the place to.find out about such issues without sneery posts implying grabbiness.

Dsd not alive anymore.

If he left everything to DM and they were married at the time, then his allowances are potentially still available, making a total of £1m available.

The gov pages in IHT are quite useful

https://www.gov.uk/inheritance-taxx*

It's totally sensible to be thinking about these things now.

After someone's death, you are emotionally ill equipped to manage additional stress, and have enough to think about with planning service etc. Sorting out someone's estate, especially if they have lived in the same place for a long time, is very difficult.

The normal Inheritance Tax threshold is £325000, but I think if a house that is a main residence is left to a child of the person who dies then the threshold is £500,000.
Any tax due would be at 40% of the value that is above £500,000. You could check these figures out OP. There is plenty online. and financial advisers often offer inheritance planning.