Inheritance tax before 6.4.2020 resisdent band

[rmim]

My mum does not recall if anything was filled in to change to tenancy in common.

The person who helped them do the will was a man who came to the house - I see his profession is Will Writer under his signature - you would have thought he would know what he is doing?

Anyway it does not matter - whether it's half on my name or all on my mothers, our aim is to try and transfer it to me while reducing any tax bill.

Thanks

[maths]

... but if it was joint tenants, it would pass to mother automatically outside of the will.
What could that mean for a mother and son that were not on good terms?

Bad news !

If property held by mother/father as beneficial joint tenants then on death of one of them their interest automatically passes to the surviving spouse. In which case you inherit no part of the property and mother owns 100%.

[maths]

The Title Register Document at Land Registry shows the names of the owners.

If the property is held as tenants in common there will be wording similar to "No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court".

If there is no similar wording then it is held as joint tenants.

[rmim]

... but if it was joint tenants, it would pass to mother automatically outside of the will.
What could that mean for a mother and son that were not on good terms?

Bad news !

If property held by mother/father as beneficial joint tenants then on death of one of them their interest automatically passes to the surviving spouse. In which case you inherit no part of the property and mother owns 100%.

Ok so I don't see the paragraph you mentioned. So I guess it must be held in joint tenants. (Is this a common mistake by will writers or do they tell you to do that part yourself and my father did not get around to doing that?)

As my mum still wants the transfer to go through what do we do? Can we still use the IT allowance?

Thank you for your help maths.

[rmim]

If an item is given as a gift and the person giving the gift dies before 7 years, tax is due on the gift - can the NBR be used for to pay for this tax? Or is the NBR only for inheritance tax?

[rmim]

Ok I have tried to do some research and I have found

1. The surviving spouse will inherit the deceased RNRB and if none of it was used (as in my case) the spouse will actually get double their own RNRB regardless of what tax year the deceased died. Is this correct?

2. A gift less than 7 years will be deducted first from the NRB. Only the excess over the NRB can get the tapered relief. Any gift over 7 years is tax free. Is this correct?

3. If my mum wishes to make a gift of the house to me we have to fill in a TR1, AP1 and if either side is not using a solicitor ID1. Correct?

Are there any other tax implications that might come up due to the house being a second house that has always been let out to tenants?

[maths]

1. The surviving spouse will inherit the deceased RNRB and if none of it was used (as in my case) the spouse will actually get double their own RNRB regardless of what tax year the deceased died. Is this correct?

2. A gift less than 7 years will be deducted first from the NRB. Only the excess over the NRB can get the tapered relief. Any gift over 7 years is tax free. Is this correct?

3. If my mum wishes to make a gift of the house to me we have to fill in a TR1, AP1 and if either side is not using a solicitor ID1. Correct?

1. Correct.

2. A gift from one individual to another is a PET. If the donor/giver survives at leat 7 years thereafter no IHT arises. If death occurs within 7 years an IHT charge may arise. However, in working out any IHT charge the deceased may have a NRB (3235k) available to set against the amount of the gift. Indeed this NRB may be increased to more than 325k if the spouse of the deceased had died earlier and had not used all his NRB. Taper relief reduces the IHT charge not the amount of the gift; thus no IHT charge no taper relief.

3. If mother simply executes a Declaration of trust as sole legal owner then no filings at LR are strictly required. If however she transfers legal ownership into joint names then a filing at LR is required (am not a property lawyer but understand that filing would include AP1, TP1 (not TR1) and ID1).

Transfer of a 50% beneficial interest of a property which has never been mother's only or main residence means a CGT charge will arise on any capital gain made.

[AGoodman]

https://mindatrest.co.uk/blog/how-to-tell-if-property-is-owned-as-tenants-in-common/

Look for the restriction in Section B described in the above link. If the restriction is there, its a tenancy in common and your father can leave his share by will.

The lack of a restriction does not always mean it is a joint tenancy. Some solicitors may prepare a document to "sever" the joint tenancy (turning it into a tenancy in common) but not register the change, just keep a copy of the document. That doesn't make the severance any less effective.

The solicitor who prepared the will should know if they severed the joint tenancy.

If it's a joint tenancy, the whole property passes to the survivor automatically. The will is pretty irrelevant.

[maths]

Not wishing to get too bogged down, but for discussion purposes, if a joint tenancy were to be severed it only has effect in equity if is not registered as a restriction in the register at LR.

I accept that registration is not strictly necessary but given that one or all of the joint tenants decided to sever it wouldn't make a lot of sense not to then register.

Certainly, where no severance has been recorded a purchaser is able to rely exclusively on the register of title and assume that there was a joint tenancy.

[maths]

The person who helped them do the will was a man who came to the house - I see his profession is Will Writer under his signature - you would have thought he would know what he is doing?

You would, but that could be a dangerous assumption to make.

Wills/tax/property with respect to giving advice can be a lethal combination for whoever is advising. If you want a bit of light reading (depressing if you're a solicitor) at this time the case of
Carr-Glynn. v Frearsons (solicitors) [1999] may be with a read. The unfortunate solicitor was found negligent when, in essence, she failed to sever a joint tenancy on behalf of her client who had expressed the desire to leave her interest in her home (held it seems jointly with her nephew) to her niece.

Depends upon viewpoint as to whether the C/Appeal decision was a bit harsh or whether the firm of solicitors deserved it.

You pays your money and takes your choice.