To get advice on what to do about DD still at home

[Downtownonsaturdaynight]

She is 39 and lives with myself and DH. My other DD has just moved out with her partner who is paying the mortgage on a flat. Without him she would also be home as we live in a very expensive part of the UK (Near London) My DD who still is with us, works but doesn't earn enough to move out. She has chronic illnesses but has managed to accumulate a large amount of savings (60K).
Myself and DH are concerned about the inheritance tax. My friends keep saying we should downsize from our 3 bedroom house and move into a smaller property with DD, but can't see DD wanting to do this as she works nearby and is desperate to be independent.
Is it worth us downsizing and using that money, help DD to get a 1 bed flat or should we just stay where we are?

How much is your property worth - the inheritance tax (currently) for properties owned by a married couple is 1million (500k each)

how would your other DD feel if you did that and how would you do your will then?

615K.
I thought the inheritance tax was a lot lower than that....

I think you should stop trying to make plans for something so far in the future with regard to inheritance tax. I assume you are in your 60s so possibly another 20 years. Legislation is likely to change more than once in that time.

I would not downsize now to give your daughter money as this is may possibly attract charges. Sinking such a large part of your equity needs careful planning. Seek finance and legal advice before you commit. This area is a minefield of problems.

If you do your Wills correctly, with allowances and use of Nil Rate band, last one standing leaves £1M free of IHT (currently).

OK, Thank you for this information. Helps to get an outsiders view at times

IHT is an individual allowance but can be shared in a joint marital home so you are under it by a way at the moment

what did you think inheritance tax was?

and I can vouch we just sold DH parents property for 900k without paying tax

what I would do is get legal/financial advice to set out what you want in wills and stay in the house as long as you want too

If you are a happy then stay where you are and ignore everyone else

Get your wills written and advice from a solicitor. You won't be paying tax on that amount unless the rules change.

I knew what inheritance tax was but was under the impression it was a lot lower than that for some reason.
We definitely will be updating paperwork.

Now, If DD can massively up her earnings or meet someone then a worry would be lifted off my mind for sure.

Can you release some equity in the house to help her out with a deposit for somewhere and then you can stay in your house?

This is terrible advice. In your 60s is exactly when you should start plannng (if not sooner). Cash gifts are subject to IHT if the person giving the cash dies within 7 years of the gift.

Also, if the daughter is 39 the parents could easily be well into their 70s.

How would your other daughter feel if you bought her sister a flat!? Yes downsize and release equity help them both financially but I’d be so resentful if my parents gave my brother financial help but not me.

What is she earning just now? Does she get PIP?

Why on earth should they do that? The daughter at home has saved £60K!

From a completely different bucket -
how on earth can a 39 yo person live at home with parents and function/be happy, content/ fulfilled?
Where is their own life?
😳

Honestly I'm confused why 60 grand of savings isn't enough for a deposit?

would you make sure you gifted both sisters the same amount so it’s fair?

Depends on if her earnings are enough for a mortgage? One bed flats in my part of the SE are 200k+

Respectfully if you'd like to downsize but "can't see DD wanting to do that" then you're giving far too much stock into what she wants. She is nearly 40 still living at home and if you want to downsize you should. She has a big deposit, she can move further afield and buy, rent a room somewhere, a small flat, look at shared ownership or whatever. You cannot put your life and decisions on hold for an adult child, barring any severe special needs etc.

Yeah this.

Where I am £60k would be a huge deposit and she’d have her pick of lots of houses even if she was working full time on NMW she’d be able to get a mortgage to afford a house, but I do appreciate that’s not the case in all areas.

I agree with other posters it might be best idea to downsize & give both siblings some money but it’s worth looking at the costs and income involved to know if that would even solve the problem. Typical rule of thumb for mortgage providers is to lend roughly 3.5-4x annual income, reduced for any other debts etc. So have a look at her income, see what kind of price places are, would you be able to release enough to make it doable? It’s worth checking first.

Would you make a similar gift to your other dd?

My other DD is financially supported by her partner so she has a benefit there and she has has had a lot of support by us. She also hasn't contributed as much around the house as DD at home has.
I question whether we can give help to DD still at home now instead of saving it for when we pass, so helping her earlier if that makes sense.
As for 60K being a huge deposit, it certainly isn't round here. She doesn't earn nearly enough to live independently and isn't 'bad' enough to qualify for PIP.
As for the other comment about her still being at home, I won't dignify that with a response. I'm not asking your opinion on that and I think you are being unnecessarily rude and highly judgemental.

You say your other daughter is supported by her partner but are they actually married OP? If not then she could end up in exactly the same position at the drop of a hat if partner changes their mind.

I really don’t think you can give a substantial amount of money to one child and not the other without causing irreparable damage to relationships all round.

£60k is 10% of the value of your own property so it is enough for a deposit on a small flat if you have your valuation correct. Have you actually gone to a mortgage broker to see what she would be able to buy/ shared ownership developments/ social housing register (any health needs may give her higher priority). Whilst your other daughter may well be being financially supported by her partner there’s no guarantees that will be for ever and she may well resent you for putting all your financial eggs in her siblings basket (as it were). Far better to properly explore your resident daughters options for living an independent life so you and DH can make decisions for the future that suit you alone

This ^
Your other daughter is in a very vulnerable financial position. Do some research on that scenario and worse case situations! Herself and yous are being very naive if you aren’t informed about the pitfalls of that relationship falling apart.
Gather your paperwork.
See a financial adviser.
See a solicitor.
When you have all facts to hand, have a family pow wow with both daughters present.
That way everyone is included, can help in the decision processes and everything is above board.