I am clutching at straws here, but desperate times lead to desperate measures…
Client (aged 60) transferred his £2m solely owned property into his name and three children, as tenants in common in equal shares. However, only one of the children lives with him, (and they are likely to move out in a few years time - unmarried at present). They transferred the home to “save inheritance tax”, and the property was transferred by the conveyancers as tenants in common, after the conveyancers had told the parties to obtain their own tax advice, which they are now seeking after the event.
I believe the main practical options are to leave as is, and possibly benefit from 1/4 being out of the estate. OR, for the children to gift the property back to dad, with all parties then hoping, praying and insuring for a seven year survival.
Is there anything I may be missing and could the whole transfer be set aside as being made ‘by mistake’, and what is needed for that?
I assume he would have got cgt ppr on gift so no cgt issues on xfer to them and even though gwrob for gift to those that don’t live there so value not out of his iht estate has he maybe still secured RNRB by getting his estate under 2 million - why do they need to gift back to him and also that could trigger cgt by them if they do?
True GBR, but no good if any of the children pre-decease, less likely I accept, but still a consideration (along with divorce and bankruptcy). It’s a case of weighing up all possible outcomes and taking a view as no magic bullet.
Agree with both above comments. However in this instance the problem is that this estate is still over £2m, and as the desired IHT effect has not been achieved, essentially the GROB is likely to remain till death/sale, which has IHT/CGT implications. As well as asset protection issues. The main consideration is whether it should be reversed coupled by insurance as this was only effected within the last 12 months so no meaningful CGT issues.
Also if you are considering this does the Deed of Gift allow it to be reversed/revoked (not if an irrevocable Deed was signed).
Essentially before I try and undo it I would recommend that they take the advice now that they should have taken before and see where the action they did take took them - there may be a “fix” to the issue which is far better then trying to reverse action already taken.
If the father’s estate is worth over 2M then he may be able to afford rent which would reduce the value of his estate further. Of course the recipients of the rent would need to declare it for IT purposes.
I believe that if there is a GWROB then POAT will not apply.
Is it possible to argue shared occupation for either of the other children, if they keep belongings in part of the property, which they occupy on reasonably regular visits?.