Hi - I would welcome opinions on the following scenario, as to be honest I cannot think through the correct assessment.
We have a client with an elderly mother - who is looking to move home. Currently they live in one building, split into 2 flats.
They will be relocating to a home solely owned by the daughter, which will need some improvements made to accommodate the mother.
There doesn’t seem to be a firm decision at this stage as to whether mother will be paying a fair rent.
Should the mother wish to pay for these improvements, will this be seen as gifts / PETs for IHT purposes? Or is it something that doesn’t need to be declared when the time comes?
- On the one hand, mother is using her own financial means to buy ‘things’ to improve a property she happens to be living in. Not even a PET and so out of her estate.
- On the other hand, could HMRC interpret this as a gift to the daughter? Indirectly, she will in effect purchase ‘things’ which benefit the daughter, and ultimately benefitting herself as the occupant? Has she created a gift with reservation of benefit?
- And on a third hand(?) has she invested in her daughter’s property of which she now has a realisable value?
I’m inclined towards the former view but confess I can’t see the wood for the trees on this one.
Any and all advice would be most welcome.
Many thanks - Paul.