Making a new will unequal shares

A

Annieindublin

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Mum is widowed. Her existing will was drawn up, along with dads a few years ago. Equal shares to all 5 kids with a provision that is any one of us pre deceased them their kids get their share. One died. He has 2 adult kids.
Mum now wants to leave the house to one. Or structure the will so she can afford to buy it. The other 3 of us are so so about that. If it is what mum wants then ok.
But it’s worth about 700k. Currently mum also has about 200k in cash as well. Sis A, she’d have a significant tax bill.

I have crunched the numbers a few times. Assuming sis A has funds or can borrow a reasonable amount to pay the other 3 siblings who is the best way to do this?
If mum leaves max tax free sum to deceased child’s kids and widow and the rest to the 4 of us equally can we sell our shares to Sis A? Or should the will be structured to leave her a bigger % of the estate, (excluding the widow and her kids amount). Keep it low enough to avoid tax bill for sis A.

I know we’ll need a lawyer and tax advice. We want to avoid a rift in the family if possible. The 3 of us accept that its mums choice. Sis A hasn’t been part of the conversation.

Sis A has no kids, mum thinks that she will leave it to a niece or nephew but I’ve explained that mum can’t mandate that and in all likelihood it will be sold and proceeds split, 9 ways. Or could be left to her husband’s family. Or if they split could be sold as marital home… all these are possible

It’s not a country estate, just an everyday house on an estate.

Anyone any pointers before we engage a lawyer.
 
First - obviously, this is your Mum's call. Though it's good to manage expectations and keep everyone on board.

Secondly, this hasn't been discussed with sister A. Does she even want the house? Could be a lot of trouble for nothing if she doesn't. Mum needs to bring her into the loop. The management of her expectations is just as important as the management of everyone elses.

Third question: Is the priority to here to benefit Sis A? Does Mum want Sis A to get a bigger share even if she doesn't want, or doesn't get, the house?

Lets assume that c. 700k house and c. 200k cash is the entire estate — that's 900k. Split into five sharee, that would be 180k for each kid and the grandkids from the deceased kid get 90k each. I assume none of the kids got anything from Dad - it all went to Mum. So no CAT liability, in all likelihood.

If Sis A is simply bequeathed the 700k house, obviously she will have a CAT liability. There's no magic way around this. So Mum has to decide which is more important to her - Sis A definitely gets the house, or Sis A definitely doesn't get a tax bill.

If it's a priority not to have a CAT liablity, then I think the furthest Mum can go is this:

1. A bequest of the amount of the CAT A threshhold (currently 420k) to Sis A.

2. The rest of the estate (on current figures, 480k) to be split four ways. A quarter (120k) to each surviving kid and an eighth (60k) to the two grandkids.

3. Sis A to have the option of buying the house, at market value, from the estate if she wishes. If she doesn't. then the house is to be sold so that everyone gets their bequest in cash.

That would require Sis A to raise a loan of (700k - 420k =) 280k to buy the house. Is that something she might be able to do, and want to do?

Note that under this arrangement, if Sis A chooses not to buy the house, or can't raise the funds., she still gets 420k, with her siblings getting 120k each. Is this what Mum wants?
 
Thanks that I think has helped me see where we need to go.

I suspect Sis A would like the house. We don’t know how much she could raise. I now see that is key. If the object is to keep the house in the family we need that information. And we need it before the will is drawn up. Unless mum wants to leave her a larger share anyway so she can buy another house.

Personally I think mum is just panicking at the thought of her beloved house being in strangers’ hands. But it’s her house and if she feels that way c’est la vie!

The deceased siblings kids are going to get the minimum, we haven’t seen them in years except when they phone looking for a handout… mum feels bad about excluding them entirely so whatever tax man allows tax free will be their share. Likewise their mother. Again I think that is mad but I don’t want to have them hire a lawyer and battle the rest of us.
 
Does Sister A live in the house? Is she likely to live in the house before your mother dies?

Dwelling House Relief means that no CAT is payable in the following circumstances:
1) The beneficiary has lived in the house for 3 years prior to the date of the inheritance
2) They don't own any other house
3) She must continue living in it for 6 years after the inheritance (but I think she can sell the house and buy another and keep the Relief)

Usually when a house is left to one child, this is the reason.

If so, the will should simply say "Leave the house to Sister A, and the remainder to be split equally between the other children.
 
TomEdison said:
That would require Sis A to raise a loan of (700k - 420k =) 280k to buy the house. Is that something she might be able to do, and want to do?
Click to expand...

What age is Sister A?

If she is 70 when she inherits the house, she could get a life loan of 25% or €175k

Which means she would need €100k more from her own resources or from a loan from her siblings

If she inherits the house worth €700k in fully, her CAT liability will be

Value of house: €700k
CAT threshold: €420k
Subject to CAT: c. €300k
CAT: c. €100k

So can easily raise this with a life loan.
 
Annieindublin said:
The deceased siblings kids are going to get the minimum, we haven’t seen them in years except when they phone looking for a handout… mum feels bad about excluding them entirely so whatever tax man allows tax free will be their share.
Click to expand...
If they are minors, they can get up to 420K each before CAT kicks in.

If they are over 18, it's 44k each.
 
The estranged grandkids are adults.

Sis A doesn’t live in the house and doesn’t plan to move in at the moment. She is renting a house and has never owned. Has a decent enough income I think, good cars and holidays anyway. She’s married, he does ok too. They are both 48. I think they have decent savings as they were planning to buy a few years ago but it fell through at the last minute.

Leaving her the house would be tidier but seems like a waste to give the taxman a payout.

Mum is unlikely to live another 3 years
 
Similar issue within my family but full and open conversation was had between my mother and all her children. She wants to leave the use of a rental house to one child (X) who is single and doesn't own a home and the family home is to be sold and split between the remainder of her children. However, she doesn't fully trust X to manage the situation so they'll only get a right of residence in the rental house and it is to sold on their passing and the funds distributed to the estates of the remainder of my mother's children. She is very keen to ensure that X will always have a roof over their head.
 
DannyBoyD said:
Can hear the litigation knives sharpening from here...
Click to expand...
My friend's mother tried to deal with a similar situation with one of her 10 children and years later they're still dealing with the fallout and issues arising from trying to follow her wishes as expressed in her will. And it has cost a fortune.
 
Redzer said:
However, she doesn't fully trust X to manage the situation so they'll only get a right of residence in the rental house and it is to sold on their passing
Click to expand...

Why not leave it to the other children or one of the other children whom she does trust? Then that child can give the irresponsible child a free tenancy. A few tax issues but would cost less than a few months in the Four Courts
 
Annieindublin said:
Personally I think mum is just panicking at the thought of her beloved house being in strangers’ hands. But it’s her house and if she feels that way c’est la vie!
Click to expand...

She now has 2 goals.

In the first will, there was one goal
  • split the estate equally.

Now, she has added a second goal
  • ensuring the house remains in the family.

The question she has to decide is how to balance those 2 goals, if they conflict. If the only child who wants the house isn't willing/able to afford to buy it from the estate, then how much does she want to sacrifice the equality goal.

One "equal" option would be to give a gift to whoever takes the house.

Is there a specific reason to give it to a particular child, or is the sister just the only one who may actually want it?

For example:
"The house shall be auctioned between the children with a minimum price equal to the house's market price less 150k."

and
"The residual shall be divided equally between the remaining living children".

Another issue is how to handle any of the remaining children if they die. It sounds like your mother doesn't consider giving to the deceased estate being desirable.

Are there any non-estranged grandchild that she would want to receive an inheritance?
 
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