Tweet
Hello. First time posting and it's quite a long one and quite complicated so please bear with me.
Mum passed away earlier this month leaving a Will that gives her partner the right to live in her home for 3 years from the date of her death. Home has been valued between £325,000-£350,000.
There's also over £30,000 in a private pension and around the same (£30k in a savings account).
It's mums home bought before she met her partner. No mortgage. Her partner has lived there with her for around 10 years but didn't pay rent. Assuming they contributed toward bills.
At the end of the 3 years, the property is to be sold with 15% of the proceeds of the sale of mums house going to mums partner (not married) and remaining 85% is split between myself and brother equally. The same percentages apply to the bank savings (not the private pension as that's split equally 3 ways).
Dad passed away almost 20 years ago with the whole of his estate passing outright to mum.
My understanding is that we can claim the nil rate band from dad's estate so that the IHT threshold on mum's death is £650k as none of the nil rate band was used during his lifetime (no gifts made etc) so mums estate will be within the combined IHT threshold so no IHT is due for my brother or I and the nil rate band won't need to be claimed - being left to us as direct descendents.
The issue appears to be the 3 year property trust which I've been told by the solicitor means HMRC will view mum's partner as being classed as 'owning' the whole of the property as they're an occupant there (for the trust period) and that when the property is sold they will face a capital gains (or IHT?) tax on the 85% left for my brother & I as it's classed as a 'gift' from mum's partner to my brother & I even though mums' Will leaves the 85% to us and it's mums house (title deeds solely in mums name etc). I think I've got that right? Please correct me if I'm wrong.
So for my brother & I, we've been advised we don't need to worry about IHT, CGT etc as we're direct descendents being left the 85% but as mum's partner and mum weren't married, they will face the CGT/IHT tax bill.
My question is, firstly, is that correct?
Secondly, could we do a deed of variation to leave the whole of the property to my brother and I with 15% of the sale going to mum's partner so mum's partner doesn't lose out in any way they'll still receive their 15% but there would be no property trust so the house would need to be sold and mum's partner would need to find somewhere else to live. Would doing this mean mums' partner wouldn't have to pay any CGT/IHT or if they still need to pay something, would it be less than if the Will was left as it is?
Thank you. We're all very confused and looking for the best solution all round.
Mum passed away earlier this month leaving a Will that gives her partner the right to live in her home for 3 years from the date of her death. Home has been valued between £325,000-£350,000.
There's also over £30,000 in a private pension and around the same (£30k in a savings account).
It's mums home bought before she met her partner. No mortgage. Her partner has lived there with her for around 10 years but didn't pay rent. Assuming they contributed toward bills.
At the end of the 3 years, the property is to be sold with 15% of the proceeds of the sale of mums house going to mums partner (not married) and remaining 85% is split between myself and brother equally. The same percentages apply to the bank savings (not the private pension as that's split equally 3 ways).
Dad passed away almost 20 years ago with the whole of his estate passing outright to mum.
My understanding is that we can claim the nil rate band from dad's estate so that the IHT threshold on mum's death is £650k as none of the nil rate band was used during his lifetime (no gifts made etc) so mums estate will be within the combined IHT threshold so no IHT is due for my brother or I and the nil rate band won't need to be claimed - being left to us as direct descendents.
The issue appears to be the 3 year property trust which I've been told by the solicitor means HMRC will view mum's partner as being classed as 'owning' the whole of the property as they're an occupant there (for the trust period) and that when the property is sold they will face a capital gains (or IHT?) tax on the 85% left for my brother & I as it's classed as a 'gift' from mum's partner to my brother & I even though mums' Will leaves the 85% to us and it's mums house (title deeds solely in mums name etc). I think I've got that right? Please correct me if I'm wrong.
So for my brother & I, we've been advised we don't need to worry about IHT, CGT etc as we're direct descendents being left the 85% but as mum's partner and mum weren't married, they will face the CGT/IHT tax bill.
My question is, firstly, is that correct?
Secondly, could we do a deed of variation to leave the whole of the property to my brother and I with 15% of the sale going to mum's partner so mum's partner doesn't lose out in any way they'll still receive their 15% but there would be no property trust so the house would need to be sold and mum's partner would need to find somewhere else to live. Would doing this mean mums' partner wouldn't have to pay any CGT/IHT or if they still need to pay something, would it be less than if the Will was left as it is?
Thank you. We're all very confused and looking for the best solution all round.
Comment