9:05 AM, 23rd January 2020, About A year ago 4
I have a very tragic scenario and would welcome any comments.
Background: My elderly mum has been married to her husband, Mr M, for 25 years. As both were on their second marriages and both have children from their first marriages, they have always maintained an element of independence with regards to their assets so as to ensure that their respective children from the first marriages eventually inherit their estates.
Mr M bought the home that they both live in 25 years ago with his own money. Although my mum has paid towards the bills and maintenance it is their wish that the house eventually passes to his children and not my mum’s children (i.e. me), and everyone is in agreement with this.
Sadly, Mr M was diagnosed with an aggressive cancer at Christmas and has just months to live so it has brought into urgent focus their Wills.
On his passing Mr M’s Will provides for my mum to remain in the house for as long as she wants and then when she dies or moves out it passes on to Mr M’s children.
Problem: This above scenario creates am Interest in Possession as my mum will be a Life Tenant. Unfortunately, and frustratingly, this means that the value of Mr M’s house is aggregable to my mum’s estate when she dies and so the IHT is payable by her estate before the house can pass to Mr M’s children. Therefore, I will pay IHT on an asset that neither I nor my mum own in order to pass it to Mr M’s children!
Within the Will we did try to mitigate this by including a clause that any IHT payable by my mum’s estate will be met by Mr M’s beneficiaries, but this still feels ‘clunky’ and is still problematic should my mum choose to move out which then creates a Chargeable Lifetime Transfer!
Solutions: What are the alternatives? Could Mr M gift 1% of the property to my mum now to hold as Tenants in Common which would then allow her to remain in the home? Although his beneficiaries could potentially seek a Court Order to force a sale I would like to think a judge would be able to exercise discretion as a judge would surely not want to make an elderly widow homeless from her home of 25 years to which she has paid to maintain, and that any request would be declined or postponed. Is this a possible solution and do judges have discretion in these matters?
I should make it clear that everyone is very amicable and I do not envisage any problems, but am just trying to cover all scenarios in seeking to balance my mum’s right to stay in her home of the last 25 years without compromising her IHT situation.
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