Gifting a Property to between 4 siblings - Please Help!

by **ti-grr** on Fri Jan 13, 2012 4:41 pm

The Wife and I are looking to distribute some of our childrens inheritance to our 4 children now so they can enjoy it whilst we are still here. We are also hoping to reduce the final IHT to below the 40% bracket if we can distribut some of it now.

We currently have 1 of our children living in a property which is wholly owned by my wife and I, which we paid £140k for it back in 2004. We wish to gift this property between the 4 of our children (a share of £35k each) but with the option that our Son who is currently living there to pay off his Brothers and Sisters £4k per annum until the balance of £105k is paid (£35k x 3).

We were thinking about a Deed of Trust but are not sure of the best possible route to avoid any of them paying IHT. Also is it worth protecting my son from any divorce settlement he may have (God forbid), although he is not yet married but most likely will be in the future.

Any advice would be gratefully recieved.

by **section 44** on Fri Jan 13, 2012 4:51 pm

ti-grr wrote:Also is it worth protecting my son from any divorce settlement he may have (God forbid)

Do you consider that some posters on here know you and your son well enough to answer this?

by **ti-grr** on Fri Jan 13, 2012 5:11 pm

"Do you consider that some posters on here know you and your son well enough to answer this"?

I meant advice on a trust that prevents my son (the bloodline) losing half of his inheritance and the concquences on Tax burdens via a Trust.

To be honest he is very much the sort of person to distribute 50% without question but my wife and I have worked hard for what we have got and want our Children and their Children to benefit form it!

Anyway perhaps the posters on here could give advise on the first part of my question....?

by **Peter D** on Fri Jan 13, 2012 5:29 pm

Trusts aside for the moment. I assume you are aware that gifting the property will be a disposal at open market value and the gain you have made will be liable to capital gains tax. The gift would be a PET and remain in your estate for 7 whole years. The Son, if and when he sells the property would not have any CGT as it will be his PPR but the other 3 siblings will have a CGT liability on the disposal of their share, assuming there is a gain.
You need to take face to face professional advice on this before you do anything. Regards Peter

by **maths** on Sat Jan 14, 2012 12:47 am

Settle the property on trust.

Any capital gain can be held over; if you have made no other material gifts no IHT arises.

Property could be appointed out in future and any capital gain held over. If son who receives property lives in it before sale no CGT arises on sale; spoils can then be shared out amongst siblings.

Trust also offers protection re divorce.