I have a query relating to a non-taxable estate and would be very grateful for any opinions or if someone could point me in the right direction of any guidance. The answer won’t make a difference from an IHT perspective as the estate is well under the limits when transferrable nil rate band is taken into account.
Deceased lived with her daughter in a home they genuinely shared. The property was owned 2/3rds by the deceased and 1/3 by the daughter. It was agreed that bills would be shared and this appears to have happened but this was a rather informal arrangement with inconsistent records.
The daughter was supposed to pay for her 1/3rd share at the rate of £300 per month. On death of the mother, the Will releases the daughter from all future obligations to pay the remainder of the “loan” and states that this is to be construed as a tax free legacy.
There is a little work to be done before the figures can be agreed but as an example:
The 1/3rd share was valued at £100,000
The daughter has paid back £20,000
The release of the outstanding £80,000 left to pay becomes a legacy to the daughter.
Does anyone have any experience of how to value the mother and daughter’s shares in this kind of scenario. Would it simply be a case of deducting the amount the daughter has already paid back to the deceased from the value owned by the mother at the date of her death?
Thank you very much in advance
Respect Wills Ltd