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Where Taxpayers and Advisers Meet

Does GWROB cease after death?

Joined:Mon Feb 05, 2024 7:15 pm
Does GWROB cease after death?

Postby jonwatts » Mon Feb 05, 2024 7:22 pm

Request for a view on IHT exposure

Advice appreciated, in the following scenario if mother and father made son a joint tenant of the family home, and each parent lives more than 7 years after the transfer and all occupy the property together throughout.

Assume as a worst-case scenario that the initial gift of 1/3 share to the son is regarded as a GWROB.

Is my thinking below, correct?

The initially gifted 1/3 share remains in the estate of both parents divided equally between them for IHT purposes, in effect both parents still possess 50% of beneficial interest, upon the death of the first parent their 50% beneficial interest is passed on equally through survivorship to the son and the remaining parent equally?

Does this result in the son now acquiring 25% of the total beneficial interest of the property and this 25% is not regarded as a continuing GWROB? and the other parent also inherits 25% share of beneficial interest, and if the value of the deceased estate is below the IHT threshold there is no IHT liability?

And upon the death of the remaining parent the initial 50% they started with is summed with the 25% inherited, making now the total of 75% in the estate of the remaining parent? And if the value of this 75% is below the IHT threshold there is no IHT liability?

Is this thinking correct?

Joined:Fri May 16, 2014 3:47 pm

Re: Does GWROB cease after death?

Postby AGoodman » Tue Feb 06, 2024 4:32 pm

You've approached it in a slightly confusing way. I'm not sure if you've confused actual ownership with deemed ownership of the GROB regime, which is only relevant to calculating inheritance tax.

On the first death, the deceased parent would own 1/3 and have a GROB in a further 1/6. 50% of the property would be in their estate for IHT.

On the second death, the deceased parent would own 50% of the property (being one of two joint tenants) and have a GROB in a further 1/6, being the share that they originally gave to the son.

Their estate for IHT would therefore contain 4/6 or 66% of the property's value.

(this is all on the assumption that there is a GROB or failed PET)

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