How do I deal with this GWROB?

[Unmissable]

I am dealing with the estate of my Father who recently passed away. Everything will go to my mother, but how I deal with a GWROB now will influence how I deal with my mother’s estate when she eventually goes.
About 17 years ago my parents invested about £50k in a property with my brother to run as a buy to let. It was a 50% share. The property is only registered in my brothers name, but there is a family understanding that 50% of the property belongs to my parents and they have been receiving 50% of the net rental income for the last 17 years. (And declaring for income tax purposes). My mother will want to keep receiving the 50% income, especially now my fathers pension payments have reduced. There was no mortgage at the time of purchase. When my mother eventually goes, my brother understands that his share of the estate will be partly paid as him receiving total ownership of the property at whatever 50% of current market rates will be.

I am not trying to hide the asset , but want to know whether I should treat it as though it is tenants in common, even though there is no paperwork supporting this or a GWROB?. Would my parents 50% share be jointly owned? If it is a GWROB, would the value be the original £50k or 50% of current market value?
I am just trying to work out where on my IHT205 Form I record the asset.

Thanks

[someone]

I'm unclear where the gift was or why there's a reservation of benefit if there was a gift.

I would get a declaration of trust drawn up to reflect the situation that has always been in place.

In this case I wouldn't DIY it as you cannot back date it but you also need it to be clear that no transfer is happening as of the date of the DoT and you are merely documenting the situation as it always was.

You might need to get both an accountant and a solicitor involved. The solicitor cannot advise on tax and the accountant cannot provide the DoT (I believe) but the accountant will be able to tell you if the DoT achieves what you need (The solicitor might not understand the tax situation so might produce something that takes you from A to B via C instead of directly.)

Some larger firms might have both in house. That may or may not be cheaper.

[someone]

I've just realized that you don't say that there's still no mortgage.

A mortgage might complicate things as, presumably, it will be in your brother's name alone.

[someone]

Oh, and to answer your question, assuming the property is owned 25% mum, 25% dad, 50% brother (should match the proportions for income tax on the rent) then dad's 25% share goes to mum and the value is the value on the date of death.

[AGoodman]

Yes, I would treat the share as an asset of the estate rather than a GROB.

Ideally this should be documented by a dec. of trust (solicitors can advise on tax! although I often wish we didn't).

Do you have evidence the share was held by your parents half and half? Who declared the income?

If they declared the income half each (implying they owned the share half each) then the default is probably tenants in common but nothing really turns on it if the will leaves it to the survivor anyway.

[someone]

solicitors can advise on tax! although I often wish we didn't

That's interesting. My solicitors kept saying 'we cannot advise on tax' even when it came down to filling in the land tax return and left it to me to contact HMRC to find out what to put where.

(They would have had me paying no SDLT, which I knew wasn't correct. The guy at HMRC knew exactly what I was talking about and was very helpful)

[Unmissable]

Thanks.
I will look into DoT. Income tax was paid 25% Dad, 25% Mum, 25% Brother and 25% brother’s wife, so looks and feels like Tenants in common, even though the deeds don’t state it.

[AGoodman]

Some solicitors can advise on tax.

I do despair a little at solicitors who do not offer SDLT advice and basic CGT filing requirements (hence all the NRCGT problems) but it can get complicated quickly and conveyancing has become so commoditised that many resi prop solicitors are competing with online conveyancers offering to do the bare minimum for tiny sums.