Inheritance from mother - need advice

[js2456]

I did search on the forum, but couldn't find anything specific to my question, so apologies in advance if this is going over old ground.

I am an only child and lost my father over 10 years ago. It is just my mother and her estate which consists mainly of a few properties, which is worth
about £800,000. It also includes the house she lives in which is worth the majority of it. She does have some investments and a small amount of cash.
She has a partner and they live in the main house.

I know a number of people in her position have set up estates/trusts (or something to that effect) in order to pass the money on without tax obligations.
My mother is aware that this can be done, but is very worried that by doing this now and transferring things over - that she will lose control of her estate to me and that could result in me making decisions that she wouldn't want.

I understand her position on this, but am also very worried that it will be too late by the time she does it by herself or it just wont happen at all. I wouldn't mind if the money wasn't there in the first place, but the fact that it is and half of it (money that has already been taxed) will go to the government if we do nothing is just killing me

I heard someone say a while back that a Trust could be set up in a way that allows her to keep control, but I don't know if that is the case..
Is it true and is there anyone that can point me in the right direction here?..

Thanks in advance.

[pqtaxation]

..... I am an only child and lost my father over 10 years ago. It is just my mother and her estate which ... is worth about £800,000. It also includes the house she lives in which is worth the majority of it. She does have some investments and a small amount of cash. She has a partner and they live in the main house......

1) When your father died did he leave all his estate (what he owned) to your mother, thereby not using his nil rate band (NRB)?

2) Where do you live if your mother & partner live in the "main house"? is where you live owned by your mother?

[js2456]

Hi

Thanks for the reply..

1) He left everything to my mum, bar an £80k amount to me and another £80k to his daughter from another marriage.

2) I live in rented accommodation which I pay for and has no relation to my mother.

[pqtaxation]

The two most obvious comments about mitigating the liability to IHT on your mother’s death, based on your first post, looked to be as follows but after reading your second post they appear only of limited, if any, scope:

1) Transferable NRB from your father – but when the NRB in 2000/01 was £242k and in 1998/99 was £223k. If you and your step-sister were each bequeathed £80k and say the NRB was £230k then only about 30% of his NRB would be available to transfer to your mother’s death estate 30% = (230-2*80)/230*100.
30% of current NRB of £325k = ca £100k

2) Gift of dwelling in which you live if it was an annex to main house. No scope there it appears.

So if your mother will have a death estate of £800k the supplemented NRB would be 1.3 *325= £420k and so IHT payable would be 40% of (800-420) = about £150k.

To give your mother and you any specific advice on her estate planning to mitigate that liability of around £150k would require a lot more information about her estate, her future intentions (e.g. for the house and for her relationship with her current partner) and her other circumstances (e.g did she survive a husband other than your father).

[js2456]

Thank you again for your response.

I am happy to take this further with you or another party in more details to find a solution to reduce tax liability.
Problem I have at the moment is a bit of a fight with her over this issue. We are both aware that we may be able to reduce/eliminate tax liability but she is very worried about losing 'control' over her estate before she is too old.

So my main question is, can we eliminate tax liability and at the same time allow her to keep control of decisions on her state from now till another 10-20 years for example?

If the answer is yes, I can go forwards with this otherwise I have to leave it.

[pqtaxation]

Problem I have at the moment is ...... she is very worried about losing 'control' over her estate before she is too old.

Obviously this is a common problem area for adult children like you who expect to be beneficiaries on future parental death.

If you send me a private message with your phone no (click on your user name and then click on control panel to do so) I can give you some general thoughts and possibly the name of an appropriate, local professonal with whom your mother (and you if she wishes) could meet.