Hi,
I'm looking to get a little help with lifetime rent as it has been raised by a solicitor dealing with my inlaws' wills.
My mother in law and father in law have a house (£200k) and cash (£250k) and are both in their late 70s. They are revising their wills and looking at giving power of attorney to their two adult children.
My father in law can't be trusted with managing cash and he knows this. His wife currently had all the assets in her name but their income is his pension. If he dies first she will live off the assets.
My question is over inheritance tax and the lifetime rent suggested by my mother in laws solicitor. The solicitor suggested that if she was to die first that the £250k should be passed to her two adult children to prevent it being frittered away. Her husband would remain in the property with a lifetime rent with the property passing again to the two daughters on his death. He would not pay rent to live there. This suggestion is to prevent their father from selling the property and wasting the money, ultimately being penniless and having nowhere to live. The solicitor couldn't give any guidance on IHT but suggested we find advice.
I understand a little bit about IHT but wanted to confirm about IHT on my mother in laws death. Is her estate £450k with IHT to pay as it is being passed to her daughters or is it £250k (the cash going to her daughters) with the property forming part of my father in laws estate which will then transfer free of IHT to his daughters on his death?
ie if we did as the solicitor suggested would their be no IHT to pay?
Or is it not that simple? I understand about potentially exempt transfers but we are going down the morbid route of assuming that my father in law will die with seven years of my mother in law.
Any guidance will be much appreciated.
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