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Original poster

Inheritance tax question.

42 replies

GingerFreaker · 27/04/2021 13:28

I am divorced, mortgage free with one teen with autism. .

I have a brother with learning difficulties, but independent. He lives in my late parents home, which was left to me, with the proviso he has a home for life. My brother has history of stupid financial errors, the hope was to keep a roof over his head.

However, this all means I have a lot of property in my name, and not much cash. So, in the event of my death, the tax bill is likely to be huge. I can't see a way of my (now teen) son paying this without having to sell up.

If I save, it just adds to the assets. And house values just go up all the time anyway...

How do I plan for my son to get round this? I want my son to have security near his extended family, not to be packed away.

OP posts:
HerRoyalNotness · 27/04/2021 13:47

Do you have a life insurance policy that could cover the tax? These aren’t part of the estate for IHT.

Original poster
GingerFreaker · 27/04/2021 13:50

I've only found life insurance policy's that have reducing payouts. Wonderful if I die in year 1, but not year 5, sort of thing.

OP posts:
LadyCatStark · 27/04/2021 13:51

Put your own property into your son’s name when he turns 18?

AllThatFancyPaintsAsFair · 27/04/2021 13:54

@GingerFreaker

I've only found life insurance policy's that have reducing payouts. Wonderful if I die in year 1, but not year 5, sort of thing.
Where do you live? Asking because it's easy to buy life assurance for a set amount in England so if you live in a different country the tax advice might be different
ZombiePara · 27/04/2021 14:04

You should be able to speak to a solicitor and get one of the houses if not both put into a deed of trust for your son..

Not legal myself, but i have seen it on a few groups I'm in and was looking at with regards to family members and paying for care etc.

Alternatively, could you downsize your parent's property (with the proviso for your brother to live there) and give him a more suitable and self contained place? This may free up some money for you, and also lower tax issues.

fromdownwest · 27/04/2021 14:04

@LadyCatStark

Put your own property into your son’s name when he turns 18?
What would this acheive?
Original poster
GingerFreaker · 27/04/2021 14:07

I'm not intending to die any time soon, btw😂

I'll look into set amount life assurance. But for how much? Property values just go up and up.

And there's the other issue of putting a property in my son's name. Should he marry, it would need to be ring fenced somehow to protect me from a marital split.

It's all a bit complex.

OP posts:
NewLynHill · 27/04/2021 14:07

Surely you hold your brothers house as trustee, rather than as part of your estate?

Is there documentation to this effect or not?

Original poster
GingerFreaker · 27/04/2021 14:13

No, it's not a trustee situation. My dad changed his will shortly before he died, it was to be in my brothers name, but he made stupid decisions which cost my parents thousands to sort out. The thinking being that he has no assets and can't lose his home.

It would be difficult to sell my parents home for something smaller. That would be out of the area and defeats the purpose really.

OP posts:
NewLynHill · 27/04/2021 14:21

Even if the Will said the house was left to you absolutely, there’s still appears to be a life interest trust of some sort here that should take it out of your estate. One for a solicitor to bottom out I would think.

ForensicAccountant · 27/04/2021 15:10

You don’t need decreasing life cover. It is generally available level term and increasing term as well, where the sum assured increases in line with inflation (not necessarily house price inflation). If you only want to cover an IHT liability, you only need to cover 40% above your nil rate. The important thing is to write the policy into trust as otherwise the payout itself will be part of your estate.
I recommend getting advice.

Original poster
GingerFreaker · 27/04/2021 15:20

The problem is getting advice.

The solicitor told me to find an accountant.

I've tried several. They're not interested.

I need a specific kind of accountant I guess, but can't find one.

OP posts:
Alm1986 · 27/04/2021 15:28

You want to speak to a chartered tax advisor. You can search for one on the cta website and filter by specialism, such as inheritance tax/trusts and estates/financial planning.

ZombiePara · 27/04/2021 15:54

Have a look on facebook - safeguarding futures health & social care support

Someone posted on there about a similar situation this week, and it is run by people who do this for a job.

They can definitely advise you with what you need to ensure it goes to your son

NewLynHill · 27/04/2021 16:06

I am a chartered tax adviser!

If you came to see me I would say I need to know the nature of the trust before I can advise you. Despite the will not having an explicit trust on its face the circumstances may mean there is in fact a trust and the property is not in your estate.

I would send you off to a solicitor before I gave you tax advice.

Dinosauraddict · 27/04/2021 20:56

Find one that's a member of STEP - Society of Trusts and Estates Practitioners. They're the best specialists to advise here.

Original poster
GingerFreaker · 27/04/2021 21:56

@newlynhill can I ask why you suggest I see a solicitor first? I tried that, he told me to find a tax accountant.

I'm going round in circles.

I'll try again. One concern is that no one will confirm that they can actually assist or not, until after I've made an appointment. They are expensive and I'm getting nowhere.

But cheers all for your suggestions.

OP posts:
NewLynHill · 27/04/2021 22:02

I would want a layer to read the Will and listen to your explanation around your brothers right to live in the house. This is to establish whether the property is held by you on trust for your brother.

If it is then this is not part of your estate.

Then you can do the tax planning bit.

Trumplosttheelection · 27/04/2021 22:09

Your brothers home needs to be held in trust somehow or otherwise your son could evict him. I'm sure he wouldn't but it's possible.
Our neighbours house is owned by the parents and left in a trust for their autistic son, his NT sister is the trustee and will I assume inherit the family home.

GertiMJN · 27/04/2021 22:15

Was the "proviso" re db living in the house specified in the will or just agreed between you and your df?

Original poster
GingerFreaker · 27/04/2021 22:58

@newlynhill Thankyou, that makes sense.

There was nothing specified in the will but I've always known I'd take care of my brother, so no surprise.

No one would evict him. He's much loved.

But, can someone please give me an idiots explanation for a trust. And potential ongoing costs that it would incur. That's another concern for me.

OP posts:
NewLynHill · 27/04/2021 23:16
  1. How much is the house worth?
  1. What degree of learning difficulties does he have? Can he/does he claim DLA/PIP and at what rate? (I think there is at least middle and upper?)
saltychoc · 28/04/2021 09:55

Your parents ex home would not be valued at full market value on probate if you died before your brother as it has a lifelong interest in it.

This is how I understand it as a situation to this happened recently in my family.

Your executors will need to get the house valued by a surveyor would would also look at how old your DB is at the time of your death to determine the actual value of selling a house which has a lifelong tenant as apposed to the full market value if the house was empty.

Did your parents provide with you the means to maintain your DB house?

You can also sell the house to investors with your DB as the sitting tenant, you obviously don't get full market value - but it frees up the money for you and removes you having landlord responsibilities to your brother.

(Or your DS could sell it when you die)

saltychoc · 28/04/2021 09:57

Why don't you ask the Solictors who wrote up your DDads will to explain what your options are?

Original poster
GingerFreaker · 28/04/2021 11:37

He's the solicitor who told me to find an accountant.

🤷‍♀️

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