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Owning part of a property before the resident died
Ryan Griffiths
Posted: 19 November 2017 11:25:39(UTC)
#1

Joined: 19/11/2017(UTC)
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Hi

Wondering is anyone can help, feel I need a bit of clarification .

My Grandad passed away in February, but I owned 1/4 of his home as it was put in my name when he brought the property 6 years ago.

As the house has now been sold, do I need to wait for probate to claim my 1/4 of the value, or am I entitled to my share straight away?

I am not entitled to any additional equity as my grandads 1/4 is being passed to my mother (so she will have 1/2 total)

As it was the sale of an asset I already owned before he passed do I need to wait for probate before accessing the money?

I understand that my grandads 1/4 that is passing to my mother needs to be processed via probate, but surely not my 1/4

Many thanks
Michael Loveridge
Posted: 20 November 2017 20:58:54(UTC)
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You say
Quote:
it was put in my name when he brought the property 6 years ago
but that can't be right. If it was, you would have had to sign the sale documents.

I'm therefore assuming that on paper the house was registered in his name, but that you were entitled to a quarter share. This would normally have been documented either in the original transfer to your granddad or in a separate `Declaration of Trust' that would have been signed at the same time.

If it was registered in your granddad's name probate must altready have been granted, as the house could not have been sold without it.

Either way, you were entitled to your quarter share on completion of the sale. If you haven't received it you need to ask the solicitors who dealt with the sale why not.

Alan Selwood
Posted: 20 November 2017 21:39:15(UTC)
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The Land Registry may be able to throw light on the true ownership at the time the property was purchased.

It will cost you £7 to find out from them.

https://www.gov.uk/get-i...nd-land/copies-of-deeds

But the solicitor should also have a copy of the title deeds, otherwise how could he/she have established that it was part of the estate when carrying out probate or being involved in the sale process?

It does sound as if either you were entitled to a share under some legal arrangement or that the house was originally bought in the joint names of Dad, Mum & yourself. (As tenants in common? Or as joint tenants?).

Best to speak to the solicitor to clarify the precise details.
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Guest on 21/11/2017(UTC)
jeffian
Posted: 21 November 2017 10:35:00(UTC)
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This is definitely an area where you need professional advice, but as soon as I read your post 2 things jumped out at me.

1) We have discussed 'reservation of benefit' before on these threads. In seeking to avoid Inheritance Tax, you cannot 'give away' your home to your relatives and go on living in it, unless it is a genuine 'arms length' transaction and you pay the owner a full market rent. If your grandfather was not paying rent to the various 'owners', then the house is likely to fall back into his estate for IHT.

2) You say the gift was 6 years ago. Again, this is likely to be a 'failed PET' (which requires the donor to live 7 years from the date of gift) with the house falling back into the estate.

The solicitor dealing with the estate should be able to advise on this.
martin verlaine
Posted: 21 November 2017 15:47:42(UTC)
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I agree with Jeffian This is a gift with reservation and therefore non effective for Inheritance tax purposes unless it can be evidenced that your Grandfather paid rent for your one quarter. It seems to me your mother has the same issue for her share.

Not aware of how much the value of the property has increased in the 6 years since the ' gift' but unless your Grandfather's estate is greater than the IHT threshold, the matter will be largely irrelevant. If the property is in Joint names on the land registry then the property would pass under survivorship rules to the other persons named.

If it is deemed tenants in common then this would not be the case and divisible shares would have been created.

The recommendation that you speak to the Solicitors dealing with the estate and or conveyance following the sale is correct.

Alan Selwood
Posted: 21 November 2017 21:02:38(UTC)
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The IHT factor mentioned above is quite correct : if you give away part of an asset but continue to enjoy some benefit from it, the IHT 7-year clock for Potentially Exempt Transfers never starts ticking.

There are other issues : if part of the house is owned by someone other than a non-separated, non-divorced spouse, the gain in value between acquisition and disposal may count for CGT.

In order to determine exactly what the position is re ownership and tax consequences/liabilities, you have to get the facts clear.

Who bought the house? Was it bought outright with the father's money (or was it in some way part of a trust?) or was it bought partly with Dad's money, partly with the son's money? Who appeared on the title deeds as owner(s). Was the property bought solely by Dad, jointly with wife as joint tenants or as tenants in common, was the son also listed as a joint owner? Who put up the money, and when? This may not be a full list.

Seek professional advice about the facts and the consequences of those facts.
jeffian
Posted: 22 November 2017 00:17:18(UTC)
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One other technicality -

You ask about "waiting for Probate" before there can be a distribution to you. You can't deal with the assets of the deceased until Probate is granted (and any IHT paid up front) so the fact that your grandfather's house was sold suggests that Probate has already been granted. That also raises the possibility that you believed that the estate fell below the IHT threshold and solicitors may not have been involved to advise you on the points raised above.

If your grandfather's estate - including the FULL value of the house - was less than the IHT allowance of £325k, then you probably don't have a problem and it is up to the executor(s) to distribute the assets in accordance with the will, but if the house plus his other assets exceeded that amount, then you should get proper legal advice on the implications.
Michael Loveridge
Posted: 22 November 2017 01:03:38(UTC)
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Quote:
If your grandfather's estate - including the FULL value of the house - was less than the IHT allowance of £325k, then you probably don't have a problem

In practical terms, the basic allowance for someone who was married is usually £650k, because of the transferable nil rate band. Although it wouldn't apply in this case, anyone who dies after 6 April 2017 also receives an aditional £100k exemption if they leave their residence to their children / grandchildren.

Again, in practice, this also often doubles up, the net effect being that for many people dying after 6 April 2017 they can leave an estate of £850k without paying any IHT.

However, I'm still puzzled as to what's happened here. Despite what Ryan stated the house can't have been "in his name" (i.e. registered in his name at the Land Registry) as he would then have initiated and overseen the sale process himself and would have had to sign all the sale documents.

But if the house was in his grandfather's name probate must have been obtained, otherwise the house couldn't have been sold.

It would be helpful if Ryan could comment on these points, if only to satisfy my curiosity!
jeffian
Posted: 23 November 2017 17:05:17(UTC)
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"It would be helpful if Ryan could comment on these points, if only to satisfy my curiosity!"

Me too!

Ryan?
Alan Selwood
Posted: 24 November 2017 00:14:13(UTC)
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Was it in the 1950s, in some gangster/cops TV series, that someone regularly said : 'Just give me the facts, man!"
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JohnW on 11/12/2017(UTC)
kWIKSAVE
Posted: 10 December 2017 21:05:14(UTC)
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It is true that distributions from the estate cannot be made until Probate has been obtained whether or not the house has been sold before Probate.
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