Recently Mrs FD parents have told us that they have changed their will to give Mrs FD a 25% share of their property if one of them dies. ie 50% to surving parent, 25% Mrs FD & 25% to Mrs FD sister, approx £80k for 25%. If both parents die then the house would go 50/50. No mortgage involved. We also reckon that they have about £200k squirreled away in investments and accounts.
My parents announced this last weekend that they want to transfer their house in to my brothers and my own names asap 50/50, again no mortgage. House probably worth about £250k, but a total estate of about £50k
Mrs FD and I already have our own home, plus we rent out another house which is mortgaged but about £30k net profit in it, which we aim to sell before we have been renting it out for 3 years.
Combined with this in about 4 years time Mrs FD and my joint income will be in 6 figures.
Whilst at our own solicitor sorting a different matter we mentioned the possiblity of parents wanting to transfer homes to our name, and he said there were pro's and con's to it, but wasn't really an expert to comment, he couldn't recommend an expert either.
Is transfering houses in to our names a good thing or a bad thing? Also who are experts on this type of thing, is it a specialist solicitor or an accountant?
Ta
at least that way the state will have to cough for their health care in their final years eh.
1/10
Blimey your soooo rich why not buy a gold Peacock?
Why shouldn't it? They've obviously worked and paid tax and NI, why should they have to pay again?
I'd do it without hesitation or guilt.
he couldn't recommend an expert either.
But he did recommend that you ask on an MTB forum though? 😆
Presumably so longs they don't die within 7 years, it would be exempt from being considered part of their estate when inheritance tax kicks in?
Its a minefield. You'd need to consider if they needed to pay you rent, what happens if they die within 7 years etc., etc.
[url= http://www.findonlegal.co.uk/cms/our-services/trusts/lifetime-family-protection-trust/ ]Family Protection Trusts[/url]
Good luck!
...and yes some of it is to avoid care home fees if possible.
Its not as though both sets of parents haven't worked for it Mrs FD parents were a fireman and ran a post office and worked bloody long hours.
My parents were both teachers, and my Mother had a heart attack whilst at work, the Consultant said the long hours and stress were both contributory factors.
We are both confortably well off, but we have worked bloody hard for that ourselves. No one just walked up to us and handed it to us on a silver plate 😈
Not sure what you/they are looking to achieve?? If they want to leave their house or savings to their kids why don't they just make a will??
Recently Mrs FD parents have told us that they have changed their will to give Mrs FD a 25% share of their property if one of them dies. ie 50% to surving parent, 25% Mrs FD & 25% to Mrs FD sister, approx £80k for 25%. If both parents die then the house would go 50/50. No mortgage involved
Me and my new missus have something similar in our wills due to me having 2 kids from previous marriage. My 50% is split 3 ways with previous kids and new kid, missus 50% is with our 1 child.
FunkyDunc - Member...and yes some of it is to avoid care home fees if possible.
I had this discussion and was told by solicitor that it is nearly impossible to avoid... sorry
Downside explained to us was that your parents risk losing the roof over their head if you hit hard times/bankruptcy etc.
Presume you would will it back to them if you went first?
Ah, presumably stamp duty would still be involved, though?
As above its to avoid care home fees if possible, and mimimising inheritance tax/capital gains tax.
It is the parents that are instigating this, not us. Of course we want to minimise how much of their cash gets eaten up if they have to go in to care homes etc, but we have concerns about tax implications for us.
Not sure what you/they are looking to achieve?? If they want to leave their house or savings to their kids why don't they just make a will??
Because they want to leave their assets to their children - not to Gideon 🙄
Are they transferring the house to you now or when they die?
If now then your parents have to live for 7 years and the the gift of the house is tax free and you only pay capital gains tax when you sell the house. If they live for less than 7 years then you will pay inheritance tax, if the total estate is greater than the current threshold.
If they die (and we'll assume that they don't die together) then splitting the house in half and giving away half of the share to each child is a normal way of managing their inheritance tax liability. My better half and I both own half of our house. If I die then my half goes to our children, hopefully keeping it under the tax threshold.
One point that you need to be aware of is that social services are very wary of people giving away their houses so that the state has to cough up for long term care when it is needed.
In your case, I would suggest that you go and find a professional to sort out your tax liabilities. It may cost a lot to sort out, but my wife's parents arranged a set of trusts that saved significantly more than it cost.
STW clearly isn't the best place to ask these questions. An IFA that specialises in IHT planning would be your best bet.
I suppose another disadvantage is that if they decide they'd rather sell it later on (for whatever reason), then as it's in your name, and obviously not your primary residence, it would be subject to capital gains.
What saddens me is that you've actually put a mental figure to percentages.
You need a solicitor, and you will need to pay for professional advice on this.
Whatever you do, make sure none of your windfall goes towards contributing to the society in which you live.
It shouldn't be a problem though. Tax is for little people. They'd only end up spunking it away on gold-plated, final salary pensions for the lazy bastards in the public sector anyway! 😉
"What saddens me is that you've actually put a mental figure to percentages."
Why does it sadden you? Its not like I am saying, come on parents I hope you die soon. Its called being realistic, people die, and rather than burying our heads in the sand and having to deal with stuff when emotionally your not in a fit place to deal with it, deal with it now so that when the time comes you can deal with the more important issues at that time. Values are important as the whole tax system is based around thresholds etc.
Others - thanks for the advice, it sounds like we need to see a specialist solicitor appears to be the most popular concensus.
My comment stands. Yes they can voice their thoughts however to you, the son to be going into mechanics/putting figures on things strikes me as being a tad cold.
Whatever you do, make sure none of your windfall goes towards contributing to the society in which you live.
Or turning it around - parents have already paid tax on the money used to buy these assets.
My parents might well be in a similar situation *
Worked bloody hard all their life, in shitty jobs, inherited nothing themselves, paid tax on their earnings and now what - give it all back to the state as either IHT or care home fees - FFS 👿
Makes a mockery of working hard, saving, doing well for yourselves / family. Might as well piss it all against the wall down the pub and let the state pay for you...
* Not too sure re thresholds etc
Makes perfect sense to plan now - unselfish behaviour IMO. The 'kids' will have enough on their plate having to bury a parent let alone deal with this stuff.
A lot of opposing views here.
I agree with OP. Its far better to deal with it now. The people taking the moral high ground about tax avoidance need to look around them and see the money (our tax money) going to people who have no intention of working or contributing anything to tax pot.
A sweeping statement I know but stand outside a Benefit building in your area for an hour or two as I have and see for yourself. Sadly our benefit system is in tatters and the people who deserve it are unfortunately being tarred with the same brush as the majority of claimants who are really just lazy gits.
Before you make a judgement go and see for yourself.
OP Go for advice and save all your parents hard earned you can.
Good luck.
ring them up, tell them you don't want their money it's theirs and they should enjoy it.
tell them you don't want their money it's theirs and they should enjoy it.
That doesn't work for fixed assets like property
Sell the lot and give all the money to a home for ickle puppies with poorly paws
[i]That doesn't work for fixed assets like property [/i]
I encouraged my parents to down size so they could realize some of their assets. And I'm glad to say they are enjoying spending it.
What's wrong with being cold hora - you need a more huggy friendly forum.
Property, tax inheritance - all cold hard facts of life for some and if the costs of getting plans drawn up add up to more than then end figure then surely that needs to be assessed not just done for the sake of it!
I don't speak from experience here, I'll inherit no property when either of my parents pass on. There I said it without so much as a tear coming to my eye - does that make me cold?
Have they changed the rules? I seem to recall that there was an exception to the rule about gifts where houses are concerned, so that if the donor still lives there, the house is still treated as part of their estate, or there is less of a tax benefit.
This is a vague memory from a very brief study of IHT as part of an accountancy qualification several years ago...
One case where you really do need specialist advice, IMO.
What's to stop you buying it off them for a tenner?
Would the money in the house be included in any divorce settlements Mrs FD (or her sister) might be stung for if it turned nasty?
Or, if heaven forbid, yourself and your wife died before the parents and any beneficiaries of your will wanted their cash - they could potentially turf out your folks.
To be honest I think Local Councils are on to this sort of thing so I'd be interested to see how you could avoid lumping up for any retirement homes.
FD, you're circumstances are remarkably similar to mine. My Mum has been looking into options for some time and after taking advice she's concluded that putting the house into a trust, with me/my sister as the trustees is the best option.
Afraid I don't know the finer details of all options she considered but the down side of this one is there's a cost to set it up (around £1k I think), but it's peanuts compared to what you might save in the long run.
As for comments above criticising you for looking into this - it's simply naive not to plan for something that's inevitable, albeit unpleasant to face, and just hope it all works out for the best. It won't and you'll finish up paying far more than you need to in tax & health care fees.
Also who are experts on this type of thing, is it a specialist solicitor or an accountant?
Both.
I know the names of a couple of very good lawyers in this field, though the size of the relative estates probably aren't worth the sort of fees they'd charge.
I encouraged my parents to down size so they could realize some of their assets. And I'm glad to say they are enjoying spending it.
I told my mum and dad the same but they didn't and both died young-ish (69 and 70) now we are sorting out their house and the inheritance they got when my mum's sister also died (again young).
I am not saying the money won't come in very useful, but I would rather they (both my parents and my auntie) had got to enjoy it.
What's to stop you buying it off them for a tenner?
They've got wise to that one, and put a stop to it. You now have to have to prove you're buying it at full market value
As for comments above criticising you for looking into this - it's simply naive not to plan for something that's inevitable
Its the figures/split. Its carving up the assets before they are (presumably) ill/on their way.
Who cares, let them (the parents) decide what they'd like to do/plan with their money. [i]Maximum returns[/i] shouldn't apply to your families mortality.
Of course this is should be private business. Hence my comment on the figures.
Yes in the UK we can be described as scared of talking about death as in some cultures death isn't a taboo subject. However in other cultures do they go round asking questions on their parents savings/putting a value on a house(s) and saying it should be %?
The real problem with all of this is there are time limits all over the place for certain things. if you dispose of capital/assets it can affect what benefits you can get, liability for care costs, tax and what you may leave behind.
I know Age concern can be useful, but due to the amounts involved, a specialist solicitor would be the way to go. imho
specialknees - Member
A sweeping statement I know but stand outside a Benefit building in
your area for an hour or two as I have and see for yourself.
😐
Sadly our benefit system is in tatters and the people who deserve it are unfortunately being tarred with the same brush as the majority of claimants who are really just lazy gits.
The majority are just lazy gits? Based on standing outside a job centre for an hour or two?
Rubbish.
ourmain - I'm sure in the scheme of things we probably are looking at a small estate. I have a couple of mates who are lawyers, I could ask them if they know anyone local. I will bear in mind your offer though.
We too have encouraged both families to spend. Mine are getting better at it and to be fair their cash may well be alot less than £50k as they are buying nice stuff for them at last.
Mrs FD parents though dont spend anything.
As to buying the house for £10 (which I dont think you can do any more). As a second home that would be some capital gains tax bill to pay when selling it on.
What you have is through pure luck.Don't. be greedy by avoiding your duties to others.
Don't. be greedy by avoiding your duties to others.
Exactly who does he have a "duty" to?
If you and your missus split up, then wouldn't 50% of your parents house potentially be part of any divorce settlement ?
We and my parents are currently looking at this too, but for them its about been able to continue living where they are (and love).
We're converting one of their old buildings into an annex for them, while we'd take on the house/mill.
Obviously we need to ensure its 'planned' correctly, so have engaged a solicitor to assist.
And Horo, you've obviously not kids (or a will) otherwise you'd have already 'apportioned' your assets. Its the right thing to do for all.
Don't. be greedy by avoiding your duties to others.
The UK isn't a communist state.
Its not as though both sets of parents haven't worked for it Mrs FD parents were a fireman and ran a post office and worked bloody long hours.
I've always wondered where this idea that welfare system is a piggy bank came from. The fact that you 'pay into it' all your life is irrelevant to whether you get anything back in future. In fact, surely your in-laws should be celebrating the fact that they've been fortunate enough never to have had to draw on state support.
Don't. be greedy by avoiding your duties to others.
I think we've been through this. His parents have paid tax once on the money earned to buy it, why should they pay it again? If it was illegal, you wouldn't be able to do it - the fact that you can means it is legal and ergo, the OP is doing nothing wrong.
Or to put it another way: would you like to pay 50K+ to HMRC when there are legal avenues to avoid it?
Def speak to a professional, I can recommend one (in Scotland) he's not cheap, but he'd get a junior to provide basic advice.
There is nothing wrong with this. You need to plan ahead while it can be dealt with in a practical way. No point in waiting until things becomes emotional. Get it sorted now. I’d like my parents to have planned a lot more and spend a lot more than they do.
When my Granddad died he left a huge mess to be sorted and my folks said they wouldn’t make the same mistake although I know they are avoiding it.
As for tax avoidance, I don’t think it is a massive problem that the current system encourages people to give stuff away 7 years before they die. That is probably a good thing.
No, not just based on standing outside a job centre.
I work next door to one and see it 5 days a week/52 weeks a year.
I could have suggested you stand outside 5 days a week too. But I doubt I would have had many takers.
Try a few hours and you will see what I mean.