My 70-year-old (reasonably healthy) mother lives in a house she is very attached to that is worth approx 500,000. However, her savings/income are inadequate for her needs. She would like to find a tax-wise way to access some of the capital tied up in her house. After reading similar situations on this website, I believe one option might be for my siblings (3) and I to buy a portion of her property, such that her share would fall below 263,000 and then for her to take that cash and create a Discounted Gift Trust. We would allow her to live in the house for free. If she can receive 5% of the principle in the DGT p.a. it would be adequate for her needs, and I understand that after 7 yrs this money would fall outside her estate.
The key objectives in this plan are to take care of my mother's immediate income needs and avoid having to sell the house when she dies to pay IHT. At her death, she wishes her estate to be held in trust to benefit whomever needs help the most from among her children (as determined by trustees). I would very much appreciate hearing opinions on whether this plan can work, or whether there is a simpler way to accomplish our goals. Of the four of us, one would not contribute toward the purchase at all, and the shares of the remaining 3 would be significantly different, leaving a bit of a complicated picture when my mother dies. Thanks in advance for any suggestions. Art
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