I have recently come across two separate cases where it was been found, after the donor has died, that they’ve transferred their property into their children’s names.
The one that pinches the most is one where father gifted his 25% share of his home into IPDI for his disabled son. The remaining 75% was gifted 25% to daughter (1), 25% to daughter (2) and 25% to disabled son.
A GROB was created as dad continued to live in the property with son. Daughters have a CGT liability of about £10k each. The daughters are needing to sell the property to buy a more appropriate one for their brother, but anything they do will now have We now have IHT / CGT consequences.
We’ve discussed settling a lifetime trust so brother can live in the property and negate the CGT. But then they can’t benefit from the trust, nor can their husbands, and they essentially, forgo their inheritance.
It would have been far simpler if dad had never made the gift to his children. I presume and know the answer is no, but for the sake of being 100% sure, is it ever possible to undo a lifetime gift?
The father can’t have taken any advice before he did this, though I will ask the family to request a copy of the Will file because it seems odd the transfer happened at the same time as the Will.
Any thoughts on how to undo this messy situation would be much appreciated as I really feel for the daughters who are doing everything they can to protect their disabled brother. And are being disinherited / suffering IHT or CGT implications in everything they do.
We’ve talked at length about settling their 50% share of the sale proceeds of the house into a RPT and noting the brother as a beneficiary to negate CGT using PPR. Offering flexibility to the daughters, but it means they can no longer benefit from the trust monies they settle. Though they can benefit in due course from the dad’s IPDI in his Will and the 25% share their brother owns himself when he dies.
Naturally a disabled trust is an option in respect of their 50% share, but that means locking the 50% away until brother dies and in reality they’d want the trust to end if the brother moved into assisted living. Presumably they can’t be a beneficiary of a disabled trust they settle for their brothers? I wasn’t sure of this point and in any case the flexibility of a RPT seemed better anyway as the sum being settled by both sisters would be well under 2 x NRBs.