Lisa and inheriting a house

[whowhatwerewhy]

DD has a Lisa and is saving towards her own house. She will also inherit half of my house when I die .
DH and myself have a minor Will so should one of us die she will inherit 1/4 of the house with the surviving parent having a lifetime interest. Her DB will inherit the other 1/2 or 1/4 .
My question is should she inherit before she purchases her own house will she still be classed as a first time buyer ?

It seems that the answer is No according to this from Natwest (but your daughter may want to check with her own LISA company or a solicitor)

"We hate to bear the bad news but once you've owned a residential property, whether it's here in the UK or anywhere else in the world, you lose your first-time buyer status. You might want to check with a conveyancing solicitor who may be able to help answer questions about inheriting a property and its implications.

You could still continue to use a LISA to save for later life, or make what is known as an unauthorised withdrawal and pay the withdrawal charge that comes with it".

https://help.cushon.co.uk/hc/en-gb/articles/12823114754716-I-have-inherited-a-property-can-I-still-use-the-LISA-to-buy-a-home

No, once she has a legal interest in a property is not a first time buyer. So once added to the deeds, appears on a land registry search, then is not a first time buyer.

No, she won’t be a first time buyer if she already owns a share in a house.

Thanks all .
Hopefully she will have purchased her house way before I pop my clogs 🤞.
I was about to nag DS to open a Lisa but unfortunately I can't see him being in a position to buy any time soon.

I've nagged my son to open a LISA even though there is no sign of him being able to buy any time either. I still think it's a good idea for the future?

It partly depends where he lives & if he would be buying with someone else. I think you can only use a LISA for a property up to a certain price & if in London even a flat is likely to be above that price. You also have to be taking out a mortgage.

Yup it's up to 450k in London which I know sounds like a lot but as you say it's hard in London. My daughter struggled even to find a nice 1 bed flat for that price. I know Martin Lewis has been campaigning for the government to increase the limit as it has been frozen for many years now but so far, they haven't.

We are in the midlands . I doubt a move to London would be on the cards , but who knows.
DD has been saving for a while but DS hasn't even started to save .
We were talking last Night saying " when I die the house is your bla bla "
Then it got me thinking about her Lisa and the implications if I pop my clogs 🤣

I've looked at this for DD andand DM's house and I've seen different answers, and I'm still not sure. I have seen people say as long as their names don't go on the deeds, that the house is sold as part of the estate and then she gets proceeded from the estate that doesn't count, but other people seem to say the opposite. We are just about to start the conveyancing process so I'm going to ask.

I think the LISA limits make more sense in the midlands.

When my daughter started putting money into her LISA I thought at least it’s a way of encouraging her to save 4k a year. She was on a decent salary but spent most of it on her social life & clothes so was good for her anyway.

Did you take advice regarding structuring your Wills like this? It's quite an unusual way to do it as lifetime interest is taxable for IHT. We were advised against it.

Your son should still have one whether or not he intends to buy. It can be used to save for old age too, with a max annual £1000 bonus, he'd be daft not to.

If she is added to the deeds then yes she loses her FTB status
if the house is sold by the estate and she gets the cash that’s fine

my son was the beneficiary of my late parents estate
the executors ( me ) sold the house and my son got the cash

he’s just bought a house this year and he had around 20k in a LISA and there was no problem in him getting FTB status and using his LISA

so what you need to be aware of is if you die and your half creates a life interest trust for your husband to carry on living in the house
solicitors if dealing with the will
will add the executors to the deeds to prevent your husband from selling the house without the permission of the beneficiaries

When my mum died the solicitors updated the deeds and put me on the deeds with my father ( this was to ensure that if my father wanted to sale.i as the executors and trustee of my mums half would need to agree to any sale .
it also meant that if my father remarried his new wife couldn’t get her hands on my mums half as I was on the deeds to prevent any sale if I needed to

however although I was technically the legal owner according to the deeds I wasn’t a legal beneficiary as stated by the will my son was the legal beneficiary

So if I did need to buy and was a fTB I would have been ok as I wasn’t a legal beneficiary of the will

one thing to mention is often when people die the deeds aren’t updated as people often don’t realise they need to do this to to protect the beneficiaries half or percentage of the house
but if you don’t there is nothing stoping the surviving spouse from selling the house as no one else is on the on the deeds even though you have a will. It couldn’t then become messy 😂

we used the same solicitor for the sale of my parents house and my sons purchase and they were fine with him using his LISA

@unsync
Yes we took legal advice when drawing up the will and have no concerns.

@Cornflakelover
That information is extremely useful.
Thankyou

Your welcome

This was all fairly recent as well
my mum passed in 2019. my father in 2021
House sold in 2022
my son bought this year

No Problems at all with him using a LISA and being the beneficiary of the will / estate as he has never been the legal owner of the property only the beneficiary of the estate

As long as your son isn’t added to the deeds then he will always be a FTB

@Cornflakelover

You have been very helpful. It's almost like you have read my mind .
We set the wills up so hopefully DD and DS will inherit as we intend.
It's mainly to safeguard from any future partners ( we know someone who re married and the new wife had everything and the children nothing )

It then got me thinking about DD s LISA and her first time buyer status.

I will have a chat with DS about setting one up even if it's just got £1 in it .

your welcome
my parents did their wills so that at least half of the house would go to the grandkids no matter what happened to the surviving spouse

it happens to often that the surviving spouse get married again and everything goes to the new wife and her kids

at least your both being sensible and proactive about the future

its also important to let the kids / or the executor know where the will is

my parents had a death box 😂😂 so we had everything we needed to hand

There may be ways around it. I'm a solicitor though not a property/probate one so please don't rely on my thoughts, though they may be worth following up with a specialist if you are concerned.

It is perfectly possible for the legal owner of a house to hold some or even all the property "on trust" for a beneficial owner who isn't actually on the deeds. So in the event of your demise, your husband would be the sole legal owner but also trustee for three beneficial owners (himself, DS and DD) meaning that he would be legally obliged to pay them their share if he sold the house. I don't think you would need to have a separate trust deed drawn up because the will would function as the deed bringing the trust into existence, though best to take advice on this.

Also, as other posters have touched on, there is a risk that the legal owner could theoretically sell the house because the deeds would not reveal the silent beneficial owners. You may be comfortable that your H would never do that but there can be strange turns of events where greedy new partners come on the scene. Your DS and DD could protect themselves from such a scenario by registering a notice or restriction (can't remember which would be correct) on the deeds so that the property could not be transferred or disposed of without their agreement. This would still avoid them appearing as legal owners on the deeds.

What I am much less clear about is whether the above would be a perfectly legal loophole to remaining eligible for LISA/FTB status or whether it could be considered a type of fraud. Like the difference between tax avoidance (legal) and tax evasion (illegal). This is probably the most important aspect to get advice on.

@honeylulu
has explained it better than I did
there is something you can put on the deeds I think it’s
so no sole restriction of sale which means the property can’t be sold without all people on the deeds agreeing

as my son wasn’t on the deeds he was still a FTB
the solicitor did say that even though I was on the deeds as I wasn’t the beneficiary of the will I could still be classed as FTB if I was going to buy

@Cornflakelover 's advice and real life experience is really valuable and well explained. (I saw it only after I had finished waffling lol!) I have learnt something too!