I am dealing with a case where the deceased main residence was bought by the deceased’s daughter via a mortgage in 2002. The purchase by the daughter paid the deceased’s mortgage on the property. The deceased remained in the property with her daughter, no rent was paid to the daughter and the daughter continued paying her mortgage payments.
In 2018, the daughter and the deceased entered into a declaration of trust where they both confirmed that the property was held as tenants in common in unequal shares. The daughter would be responsible in continuing to pay the mortgage payments but the property and the sale proceeds if sold would be held on trust for 100% for the deceased only.
The deceased died in 2024. In her Will, she specifically gifted the proceeds of sale of the property to her daughter, son and grandchildren in unequal shares.
As the property was bought by the daughter effectively repaying mother’s mortgage and then continuing to pay her mortgage payments, would this amount to a GROB?
The declaration of trust confirmed that the property was held on bare trust for the deceased, would the gift or sale proceeds in the deceased Will be valid and would RNRB be available to be used in the deceased’s estate?
The Will was made on 7th December 2018. The Declaration of Trust was made on 21st December 2018.
The purchase of property for £150,000 in 2002. The market value of the property at the time was £200,000. Deceased used funds to pay of her mortgage of £50,000. The property is valued now at £490,000 to £500000.
The legal owner of the property is the daughter and there is a unilateral notice on the register for the deceased to have a right to apply to be reinstated as the registered proprietor. Notice was placed on the register on 15th August 2018.
So is your question referring to the 2002 sale as potentially being the gift which had a reservation (ie a gift equal to the undervalue being 25% of the property FMV)?
The 2018 transactions would seem to be a gift from the Daughter to the deceased. If the property is 100% beneficially owned by the deceases as a result of the 2018 transactions isn’t the full value in their estate anyway?
Am I missing something?
By the way, has the daughter finished paying the 2002 mortgage?
I am wondering if the will file will shed any light?
my question is whether the sale of the property and the subsequent trust confirming that the daughter is holding the property for 100% deceased mom will be viewed as a GROB. Daughter is still paying Mortgage and wishes to sell the property, so the proceeds will fall back into mum’s estate. my second question is whether RNRB will be available as the house is held on a bare trust for the deceased mum.
As the property is now 100% beneficially in the deceased’s estate, is that 2002 GROB relevant any longer? Surely full value now falls into the deceased’s estate not just the 25% that would follow from the 2002 GROB (which would have been the case if the deceased had died before the 2018 transactions)?
Is not the issue of a potential GROB by the daughter to the deceased in 2018 (if indeed there was one given the retention of the burden of the mortgage) an issue for the daughter’s future estate if she does not survive the sale by 7 years. It does not diminish the value in the deceased’s estate subject to the below.
Is the estate liable to reimburse the outstanding mortgage to the daughter or is it effectively a debt from the daughter to the estate which gets netted off her share?
IHTA 19844 s5 defines estate as “the aggregate of all the property to which he is beneficially entitled” and in 8H “residential property interest”, in relation to a person, means an interest in a dwelling-house which has been the person’s residence at a time when the person’s estate included that, or any other, interest in the dwelling-house.
(3)Where a person’s estate immediately before the person’s death includes residential property interests in just one dwelling-house, the person’s interests in that dwelling-house are a qualifying residential interest in relation to the person.
The situation seems to be a monumental pickle on several fronts. There are other issues which come to mind, such as whether CGT issues were properly considered and dealt with on the disposal by gift in 2018. Subject matter expert advice is needed!