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Well over fifteen years ago my late mother (a widow) gifted a property, now worth 200k, to my brother. However this was not handled well as my mother continued to enjoy the rental income, and it seems likely to be considered a GROB and included within her estate for taxable purposes. She died recently, and that 200k value pushes her estate into IHT territory. Her will divided the estate up by percentages amongst family members, with nothing at all left to my brother (his part having been assumed to being taken by the GROB property, which has been in his name for all this time).
My brother will thus receive about 30% of the estate (once that GROB property is included). But does that also mean he has to pay 30% of the IHT, or none at all? Obviously if it is the latter case, then that means the other family members would feel they are paying his IHT for him.
If it is the latter (ie, he doesn’t have to pay anything), then in an extreme, hypothetical case, somebody about to die could borrow a lot of money, buy a property with it and then give it to a relative. They would then leave the entirety of their estate (which is neglible, but includes the substantial debt incurred) to somebody they dislike. That person would then be obliged to pay the sizeable IHT on the property that had been bought, as well as being responsible for the debts.
My brother will thus receive about 30% of the estate (once that GROB property is included). But does that also mean he has to pay 30% of the IHT, or none at all? Obviously if it is the latter case, then that means the other family members would feel they are paying his IHT for him.
If it is the latter (ie, he doesn’t have to pay anything), then in an extreme, hypothetical case, somebody about to die could borrow a lot of money, buy a property with it and then give it to a relative. They would then leave the entirety of their estate (which is neglible, but includes the substantial debt incurred) to somebody they dislike. That person would then be obliged to pay the sizeable IHT on the property that had been bought, as well as being responsible for the debts.
