lifetime interest property

[french maid]

Hi, I have a few questions I would like some help with.

My parents have now both died and left everything to me. I want to sell the family home and buy my brother a flat, but keep it under my control as he is a spendthrift. Can I buy it via a trust, but with lifetime interest for him. Since he has never owned a property I guess stamp duty would be ok if the flat is under £300k.

I am interested in a trust to keep it out of my estate for inheritence tax purposes. I will get a solicitor involved, just need a heads up.

Thanks, this is a really useful site, I've had some answers off it before.

[AGoodman]

Yes you can but bear in mind that you and your spouse (including future spouse) will have to be excluded from benefitting.

A transfer of £300k cash should be tax free provided you haven't made other large gifts in the last seven years. The cash will leave your estate in seven years' time. It would absorb your NRB in the meantime.

The trust will be a relevant property trust for IHT so suffer charges of up to 6% once every ten years. This will be subject to the NRB so will be tax free while under £325,000 (or more if the threshold ever increases). It is therefore possible that you might have to pay a small amount in ten years' time. If property doubled in that time and the threshold did little, it could be up to £18k. However, the property would not be part of your brother's estate.

If the latter parent died within the last two years, you could establish the trust with a deed of variation. The trust would avoid the ten year anniversary charge but would form part of your brother's estate on his own death.