Client A moved in with client B in September 2018. Client B gifted 50% of her property to client A who subsequently died on 5/3/2022 leaving his Estate to client C with a lifetime interest in his share of the property to client B.
The couple were non-related, client A was aged 99 and client B is aged 98 and neither client have children. Client B is leaving half her property to Client C.
Both Estates are liable to IHT.
Comments would be appreciated on the various options available.
David
How old is C? Are they related to A or B in any way? What is the property worth and are there any other assets involved or just the property?
When you say “Client B is leaving half her property to Client C” do you mean that and, if so, who is the other half being left to, or do you mean that B is leaving all her remaining half to C, such that C will eventually own the whole property on B’s death (subject to any alternative options that may become apparent)?
Thank you for replying.
(A) male aged 99 died April 2022 leaving an Estate of £ 1.1 million including half share in property (share £ 200,000) which had been gifted to him in 2018 by (B) female aged now 98, which under his Will he has left to (C) his nephew aged 70 with a lifetime interest to (B).
Apart from small legacies totalling £ 75,000, (C) inherits the residual Estate.
(A) is a widower and had no children.
Under (B)’s Will she leaves her Estate to a niece and half of her share of the property to (C).
(C) therefore at some stage will inherit 75% of the property. I understand that (C) is currently in a Nursing Home. Her liquid assets probably do not exceed £ 200,000. She has never been married.
Sorry, mistake in final paragraph (B) is in Nursing Home not (C) !
No savings sadly as not married and no children. He only has own allowance 325k and tnrb 325 if wife left to him
Why did he leave the life interest back to B? She owned it originally and has own share so right to occupy. Can B disclaim? Otherwise paying extra tax on her death.
Does Will say what happens if C dies? Does C have sufficient capacity and funds to cover care fees to avoid deprivation issue if they don’t want funds and want the niece to inherit to avoid probate again when they die? They could disclaim if residue goes to the niece (their sister?) if they deemed to die first or assign their interest as remainderman?
Unless B lives until 2025 the gift to A of a half share of the house will be a failed PET so taken into account when computing her Estate, although there may be some tapering. Presumably the fact that she also has that half share back by way of life-interest does not cause it to be double counted, such that she would be taxed on 1.5 times its value (assuming it hasn’t changed much since 2018)? She could disclaim the life interest such that the whole of A’s residuary Estate diverts to C, especially as she is leaving C the rest of the house. If she is already in care there may not be much left to leave to the niece, but the rate of tax, if applicable, could be reduced by leaving 10% to charity. Similarly C could consider a Deed of Variation to leave 10% to charity and reduce the rate of tax. It may be worthwhile doing a comparison calculation to see what, if any the savings are by so doing.
Maxine
Thank you for your suggestions - I agree that it makes sense for B to disclaim the life interest.
Thank you for your input and raising some valid points.