Agricultural relief on inheritance tax #itsComplicated

[Black_Knight]

Hows this for a first post. Can't lay enough praise on the site. It's a great resource and ive long lurked in the shadows getting insight into savings, mortgages, current accounts, inheritances etc. Hopefully the strong trend of solid advise shall continue here.

Our situation:
My fiance and I were let know that eventually when her nan dies, we will get her house, and farmland (10 acres). Not directly, but through her father. She's in fine health, so we've no rush on this, but there are some complications. I'll try outline our situation below:

1. My partners Nan is not her grandmother. She is an aunt to my partners father, and from a young age (~15) she "adopted" him when his parents died. From what I know, there was no paperwork to state this, he merely went home with my partners Nan after the funeral and that was that. From this point of view, he under Group B threshold for inheritance tax, and my partner is under group C threshold. Is there anything we're missing here or any clauses we can use. Ive seen the "favourite niece/nephew" clause, but the farm isnt a family business, its leased out currently, and my partners dad isnt going to be working on it.
2. We're not farmers, but from what ive read all we need to do is lease the land for 6 years after it is inherited (currently the land is leased anyways).
   1. Here's a problem. We're not inheriting it, my partners dad is. He has a primary residence already, so from what ive read only the land would qualify for agricultural relief (taxable at 90% reduced rate) if he already has a residence. The house would only qualify for Group B threshold of 30k tax free, leaving us with a nice bill to pick up to cover the house.
   2. If we were to inherit directly, we would qualify for group C threshold of inheritance tax (15k), but since we have no residence currently I assume we could claim this as our primary residence, and thus the entire inheritance would qualify for agricultural relief. Any more info on this? I could see this being an issue if we have a house already. It wouldnt be our primary residence, but we have plans to move there eventually.
3. We dont have any property at the moment, so aside from 2 cars, we have no assets, so we're well over the 80% assets figure required. We'll likely buy a house before we inherit, but since most of that will be a mortgage, I assume our asset is only the deposit + whatever of the mortgage we've paid off. Should still be under the 80%. Am I correct in how im calculating this?
4. Assuming the house wont qualify for Agricultural relief (since my partners dad has a house, and we may have a house when the time comes around), and we have to pay out 33% on the house value, I assume it would be best to leave it in my partners dads name, and we move into the house for 3 years before he passes it onto us (should be CAT exempt if we live in it 3 years before, and 6 years after inheritance). Correct??

The main concerns are:

• Better to inherit directly or through my partners dad?
• How to get the best out of the agricultural relief?
• How does owning our own property prior to inheriting affect us?
• Basically... whats the best approach to minimize CAT?

Questions, just ask.

 

[Ravima]

You have a lot of questions. In fact, the posting is like a very technical exam question!

As far as I can see, your partners Nan (grandaunt) is leaving your partners father (her nephew)her estate on death, and has orally told you and/or your partner that you are to inherit on death of partners father.

To put it simple, why does she not leave it to your partner/you on her death?