Hello and thanks for using Just Answer.
My name is ***** ***** am happy to assist you with your enquiry.
I am sorry to hear of yours and your Wife's loss.
Were you to hold the new property as Tenants in common or Joint tenants with your Wife and Mother in law?
I look forward to hearing from you.
We are putting the new house solely in my wifes name
Thanks for your reply.
Well, on the basis that your Mother in law had authorised her Solicitor to send her proceeds of Sale to your Wife, to enable her to purchase the new property, that money will be seen as a lifetime gift by your Mother in law.
A Will only comes into operation at the time of that person's death and their Estate has to be administered by way of what money that person owned at the date of death. As these Sale monies had already been "transferred" to your Wife, they do not form part of your Mother in law's Estate.
Therefore, if there is not sufficient funds left in your Mother in law's Estate to pay the legacies to your children, these legacies fail and do not have to be paid. However, if, for example, there is £3,000 left in your Mother in law's Estate after payment of the funeral/other debts, then each of your children should receive £1,000 each on a pro-rata basis.
I hope this assists and sets out the legal position.
Re recent enquiry would a lifetime gift have any tax implecations bearing in mind my wife inherited everything in her mothers will anyway
For Inheritance tax purposes, the monies gifted by your Mother in law would still be counted as forming part of her Estate, as the gift was made within 7 years from the date of her death.
the transferred money from my mother inlaw is commited to the new house as we have exchanged contracts and is in the bank account of the solicitor acting on our purchase.Will this money be subject to probate which would hold up the final purchase
No- the money doesn't need to be frozen or anything like that. As it was gifted in her lifetime, the money belongs to your wise. All I was trying to say is that when calculating the value of your Mothee in law's Estate for Inhertitance tax purposes, this gift amount would have to be included.
as her entire estate is under £300000 including the transferred money presumably no tax would be due is that the case
You are correct- if it is under 325K, no tax is payable, so you have nothing to worry about.