Inheritance and family home

[AICM]

Hello!

Hope you can help.

I am 1 of 3 children. My dad passed away last year and everything went to mum.

Her will states a 3 way equal split between the 3 children. The house is worth about £450,000 and is mortgage free and mum has cash and investments of about £800,000 so inheritance tax will be an issue.

If the house is passed on to the child then I understand there is less inheritance tax to pay.

Here are my questions:

The house is not mentioned in the will. There is a family understanding that my sister will have it. I am happy with this and so is my brother but will it still reduce inheritance tax if the house goes to just one child?

Can the house be passed on in this way if it is not mentioned in the will?

Hope somebody cam help!

Thanks!

If my sister does et the house, she may have to sell hers on order for myself and brother to get an equal share. Should we ask her to hand over this money before she gets sole ownership of the house?
The will says split. So you get everything valued, and say the house is 50k more than an equal 3rd share. So your sister has to stump up 50k to have it transferred wholly to her name, yes. Otherwise you have to either transfer part shares of it into 2 or 3 of your names, or sell it and split cash.

Agree with everyone that the estate is split 3 ways. It needs to be fair. Usually this means selling the house and splitting the entire inheritance. If your sister wants the house, she needs to buy you and your brother out at market rate. Anything else will probably cause falling out.
IHT will only be paid on anything over 1 million, so might not be paid, and won't be too much of a hardship if it is.

Your sister won’t get ‘sole ownership of the house’ because if the way the will states 3 equal shares of the whole estate.

Also, the house appreciating in value and the cash depleting affects you all equally, until such a time as your sister takes possession of the house because she has made the necessary adjustments to buy the remainder of its value from her siblings.

Does your sister even want the house? Instead of a share of the whole estate? If she would simply sell it then the estate may as well be divided as in the will.

My Dad (with dementia) is very attached to the house, loves it, and always talks about ‘you children’ keeping it… which is impractical, not what we want, can’t afford to run a second home, it isn’t where any of us work, etc.

So sadly his wish will not come to fruition.

But he doesn’t know that.

On the inheritance tax point, it is possible to get insurance against future tax liability. But given the potential size of the estate and your DM's incapacity (in the absence of a Lasting Power of Attorney), it's unlikely to be appropriate but should still be considered.