Deed of variation

[tax_schmax]

Tenants in common means that your father owned a distinct share of the property. If this were a joint tenancy, it would have automatically reverted to your mother. As it is, his half of the house is an asset that could be passed to you to fulfil some or all of the £325K you and your sister are set to inherit. As your mother owns half also, there should be no argument that she has a right to reside there free of charge.

In simple terms, your fathers will said that you and your sister can inherit £325K. He did not specify what this should be comprised of. Anything that was his can be passed to you and your sister, even half a house. There may be CGT complications with this route. A legal charge would be an agreement for your mother to pay you "half the house" or something close to this. You would effectively be selling your half back to your mother. She would be promising to pay you back when she died (a bit like equity release). The legal charge makes it enforceable and look a bit more "proper". A legal charge would not have the same CGT complications, but in my opinion, does look a little more contrived. You would still have something worth £325K, albeit a promise to pay.

You have a number of options, all of which have pluses and minuses. The subtext of all the replies is that you need to see someone who knows enough about all of these to be able to put you in a fully informed position. Whilst it is true that professional drafting of a deed of variation is important to stop hazardous and expensive mistakes occurring, it's the advice that is really beneficial. A trust still might be the best option. I have a saying, "you don't know what you don't know".

As for the cost, it will probably cost a couple of thousand pounds. It may end up saving much more of course. My cost estimate is for the advice on the options and the transaction that results. It might be £2,000, it might be £5,000. You should seek a solicitor with the STEP qualification, or a tax adviser with the same. The most important thing is that you understand their language and feel confident in their approach. It is obviously important to you. I wish you luck in your search.

[cturner]

I'm not sure I understand what is it is you propose.

Based on the advice given, I am asking

Is it better for

1) sister and I Have a legal charge on the two properties to the value of £325k- and does this involve changing deeds of houses , or

2) have discretionary trust set up instead

What are advantages of both and approximate relative costs.

[tax_schmax]

I think I should point out advice can only be given if someone understands your situation completely. You have only heard some of the options that might suit someone in a similar situation to yourself. There may well be dozens of others you have yet to uncover. You need to have a conversation with someone around the pro's and con's. When I advise on matters such as this, the cost is the same for a legal charge or a trust, or any of the other options that seem to have been discounted. The advice is what you would be paying for. The administration involved with registering a legal charge or drafting a trust is not the part of the transaction that generates fees. The reason people pay for professional advice in this area is that it takes time to understand a situation and a lot of knowledge and experience to understand what the best options are. In addition, the law in this area is complex. The way certain pieces of legislation interact can cancel out the effect you were trying to achieve, or in extreme cases, create bigger problems than the one you started with.

There are too many variables and unknowns to advise you on "which is best". Would you buy a house without a survey? Would you maintain a vintage Ferrari yourself with advice from a website?