Leaving house to parent

P

paulo74

Registered User
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3
Hi there,

I saw a post on here about leaving a home to a parent but I don't think it dealt with my situation hence my post so I hope I'm not duplicating an existing thread.

I'm in my forties but unfortunately I have an illness that might result in me only living for another year or two. I want to get my will in order so that I can focus 100% on treatment in the months ahead.

I do not have any children and as any of you my age can appreciate, my parents' well being in their old age is my main priority and not the tax man maximising his share of my estate.

My question is that I want to leave my home to my parents but in a such a way that the inheritance is treated under category A and not B or C.

The following is text copied from the Citizens' information web site at the following URL:

"Group A also applies to parents who take an inheritance from their child but only where the parent takes full and complete ownership of the inheritance. If a parent receives an inheritance where he or she does not have full and complete ownership of the benefit, or if a parent receives a gift, then Group B applies."

From reading the above, i'm thinking that i have to leave the house 100% to one parent for category A to apply but I have two question relating to the above:

1) I still have a mortgage on my home. Does this mean that my parent would not have full and complete ownership of the house if I leave it in it's entirety to one of my parents?

2) Category B also applies in the above text if a parent receives a gift, could someone explain to me what this means as I don't want category B to apply.

Obviously, this isn't something I'd like to get wrong and I'm sure my solicitor will help me get it right but I'd appreciate your responses just so I get a better idea of what I'm doing before going to see my solicitor.

Thank you,

Paul
 
Paulo would the home not be paid off by the life insurance?

Also I remember reading somewhere that if a child receives a non exempt benefit within a certain number of years from the parent before the child dies that the child can then leave their entire estate, as in 100%, to the parent tax free - maybe a tax specialist might post here and confirm this is right or wrong.
 
Learner2015 said:
Paulo would the home not be paid off by the life insurance?

Also I remember reading somewhere that if a child receives a non exempt benefit within a certain number of years from the parent before the child dies that the child can then leave their entire estate, as in 100%, to the parent tax free - maybe a tax specialist might post here and confirm this is right or wrong.
Click to expand...

Thanks for replay, that's a good point but unfortunately I couldn't get mortgage protection when I bought the house as I was already starting to have medical issues so I had so sign a waiver with the bank as in whatever would be owing would need to be paid. The thing is the mortgage is now quite small so I guess my parent could pay it off if they wanted to keep the house. I maybe need to see a tax specialist as this is quite complex I guess.
 
Yes you need to do a bit of tax planning. There are a few things to play with here, dwellinghouse exemption- if your parents don't have their own home and live in yours, or you could sell yours and buy your parents' house, leaving it to them on your death, thus they could qualify for the dwellinghouse exemption. Also of course threshold A ( and a half share in your house is not a 'limited interest') and as Learner2015 mentioned, s.79 CATCA, where if your parents have given you a non-exempt gift within 5 years of your death, they can take an inheritance from you which would be completely exempt, so you would need to set up a situation where they would give you a non-exempt gift, every five years or so. I would suggest a consultation with a tax advisor/solicitor who specialises in estate planning ( try a member of STEP or word of mouth recommendation).
 
paulo74 - my deepest sympathies for the situation you find yourself in. I had to deal with something similar for a family member a few years back.

As well as the advice you've got here, I'd also recommend that you have your medical consultant draft a letter confirming you are in a fit state of mind re making your will and have your Soltr keep that with the original of your will. It heads off anyone trying to be smart. (and you'd be amazed who comes out of the woodwork!).

Also consider doing a letter of wishes, you might have personal items that other family members or friends might like to have. In my case it was so helpful to have a note of what my relative wanted for funeral arrangements, so you might like to think about that as well.
 
Thank you all for this information. The non exempt gift is very interesting and I will look more into this.

Thank you

Paul
 
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