IHT and joint tenancy/tenancy in common.

[1bob]

Hello all,
My mother died 2 months ago. The wills my parents had drawn up left everything to each other in the event of one or the others death. My father is 75 and in reasonably good health. I have one brother who suffers with epilepsy and has lived with our parents his entire life (he is now 49). My mothers assets consisted of a half share in the family home, the house worth £380,000. My parents also own a shop, which provides them with a rental income of £13,000 a year. My parents ultimate intension is to leave everything to myself and my brother. We are planning to change my mothers will through deed of variation to take advantage of her IHT allowance, giving half of the house to my brother and half of the shop to myself. My father will then make a new will leaving his share of the house to me and his share of the shop to my brother. I’m worried that if my father dies within a few years we will be liable for IHT because my parents held their properties as ‘joint tenants’ as a opposed to ‘tenants in common’. Ultimately we intend to sell the house and buy my brother a flat and use the rest of the money to pay off my mortgage. Keeping the shop to provide some income for us both.
thanks.

[cranleys]

Bob

YOu will need to address the IHT - I would encourage you to vary the will and remove the IHT problem straight away. Your wishes can then be addressed.

Always available to assist.

Colin Davison - Cranleys Chartered Accountants
colin.davison@cranleys.co.uk T 01252 852220, M 07766-714000
Editor/ Writer of Property Tax Secrets, Inheritance Tax Secrets

Our aim - "create value, achieve success"

There is nothing to substitute proper professional advice because each taxpayer's personal and business circumstances differ.

[1bob]

Hello Colin,
thanks for replying to my question.
what do you mean by 'vary the will'?

[bob.fraser@towrylaw.]

Bob,
The way that joint tenancy works is that on the death of the first of the joint tenants the property passes to the other by "survivorship". Assets own under a joint tenancy do not pass by the operation of a will. In fact, no will is necessary at all. This means that a deed of variation on the will cannot be effective in re-assigning property passed by survivorship. The implication is that your plans cannot work if your parents owned the home as joint tenants (which is the most common way [but not necessarily the right way] to own the home).
I recommend that you talk your intentions through with a good solicitor.

[1bob]

bob fraser,
thanks for the advice.