Inheritance questions

[NotAnotherNCThread]

Sorry for NC, and I'm not being grabby! DParents were talking to me about their will at the weekend and I have a couple of questions but obviously I can't ask them. With any luck we have a few years yet

Dparents have a large rural house with a couple of acres. I have 3 sisters who will share the estate:
DSis1 is to have the house and garden.
I'm to have the end field (a half-acre paddock).
DSis3 is to inherit jewellery and effects.
Dsis4 is basically disinherited for reasons I don't want to discuss, DDad says she can't challenge the will and it's watertight because he's left her 'something'.

DSis 1 & 3 and myself are all very happy with the way it's divided, so no tussles amongst ourselves but I have some questions if anyone has any experience of this please.

The entire estate is over the IHT threshold, so I assume 40% of the full value needs to be paid rather than each of us only pays IHT if our inheritance is less than £325,000? I think DSis1 will struggle (house and garden) so does that mean none of the estate is released until the entire 40% is paid or would there be individual liability for our own share iyswim? If DSis1 can't pay would everything have to be sold and we receive shares of what remains? Unfortunately it's not possible for me or DSis3 to help her financially with that.

I fully expect DSis4 to challenge the will and I have no ill feeling towards her for this, I think most people would do the same. What's the likely outcome here? I assume the whole thing stops until it's settled, but would the estate then just be split 4 equal ways? I'm happy with the field and I don't want more but I imagine this will be messy. I'm assuming if DSis4 challenges the will for 1/4 estate that I can't just have my field and quietly go on my way? The field would make an enormous difference to me for reasons I'm not going into here, but would need the main property to be in the family for me to access it easily.

Assuming you are in England/Wales then IHT limits can be higher when ‘homes’ are involved and left to ‘children’, though depends on value (as a brief summary). The government website on IHT is a good starting point.

Lots of questions but this article should help with the question about Dsis4. It is the leading case in the area and upholds testamentary freedom to a large degree.
www.burges-salmon.com/news-and-insight/legal-updates/ilott-v-mitson-supreme-court-decision-in-inheritance-act-claim

Will you not accumulate allowances, if one parent outlives the other, so 650k? Tax due can be paid within a fixed period of the inheritance, or from the value of the estate before distribution, not individually.

Your parents each have a nil rate band of £325k which can be transferred to the other so there is a combined nil rate band of £650k (plus the additional allowance for the home).

Tax has to be paid based on the value of the entire estate. I suppose the testator could specify how bequests bare the burden of tax but as far as HMRC is concerned you work out the whole value of the estate and pay the tax on that basis. The executors are required to make sure liabilities are settled before distributing the estate. Tax needs to be paid within 6 months of the death unless you set up an annual payment plan. Unless there is cash available to pay any tax your parents plan may not work (i.e. one of the assets may need to be sold to pay the tax). Presumably though your parents have had advice on this as part of their estate planning.

Thank you everyone. If the allowances stack up then the tax bill should be manageable.

Then it just remains to see what happens with DSis4. I don’t think any of us (1-3) would be interested in a court battle over money and keeping her ‘out’.

DDad says she can't challenge the will and it's watertight because he's left her 'something'.

This is something of a fallacy and not necessarily true. Your parents should have been advised to leave a letter of wishes explaining their reasons in case she does contest it. I presume their reasons are valid.

If I were them I would be sorting out separate access to the field in case something should happen and the house and garden had to be sold.

And is the second sister happy with her share (assuming your Mum isn't QE2 with a stack of tiaras!)?

It all seems very unequal - I hope your parents are getting proper advice from a solicitor?

Alternatively if the three of you agree you could all do a deed of variation to leave dsis4 something. It does seem very unfair as it is, to all of you.

If I were you I'd be concerned about access to the field. To have value it has to have access. You can't control what the sibling inherits the house does. They could die/divorce and it go out of their hands v easily.

I think your parents need to take proper advice.

I don’t have the details, it was quite conversational not a strategic discussion and I didn’t like to ask questions.

DSis1 does the lions share of care hence the house. We genuinely don’t have a issue with the split. We all have enough and don’t consider it decent to bicker about money. DSis3 is a flighty, girly girl living the city life. She has zero interest in the countryside. She adores jewellery and trinkets (there’s quite a significant collection, though not worthy of QE2!). The field would be an enormous blessing for me and again I’m perfectly happy. I think I do need to accept i mightn’t have it though if it all gets juggled and split 4 ways.

I don’t know what DSis4 has been left. We haven’t heard from her in 10 years and we don’t have contact details for her. It’s very sad but it was an awful time and we’ve all tried to move on.

Rapid phone typing, sorry for the typos!

@NotAnotherNCThread

Thank you everyone. If the allowances stack up then the tax bill should be manageable.

Then it just remains to see what happens with DSis4. I don’t think any of us (1-3) would be interested in a court battle over money and keeping her ‘out’.

You can make changes to the will once your last parent dies.

It's called a variation www.gov.uk/alter-a-will-after-a-death

If you want to be fair then just sell the lot once the last parent dies (assuming nursing home fees haven't accounted for everything) and then divide by four. Land and houses aren't blood.

@Escarpahell

If you want to be fair then just sell the lot once the last parent dies (assuming nursing home fees haven't accounted for everything) and then divide by four. Land and houses aren't blood.

Hmm. I’m not especially interested in fair in this situation. We’d split 4 ways if DSis4 pushed us but only to not waste half of it in legal fees. She’s a terrible person but I’m not going to share the details on here as if our family life is a soap opera. Judge me if you wish. Of the 3 other sisters I stand to financially benefit the least by quite some margin. We’re not all motivated by the love of money.