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Ask Clare Your Own Question
Clare
Clare, Solicitor
Category: Law
Satisfied Customers: 34456
Experience:  I have been a solicitor in High Street Practice since 1985 with a wide general experience.
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We are thinking of loaning £175k to our son to buy his

Customer Question

We are thinking of loaning £175k to our son to buy his uncle's house he has inherited, the house has been valued at £300k. How can we protect our loan and should we die within 7 years will the loan be subject to inheritance tax.
Shahida
Submitted: 5 months ago.
Category: Law
Expert:  Clare replied 5 months ago.

Thank you for your question

My name is Clare

I shall do my best to help you but I need some further information first

Do you actually ever envisage the loan being repaid?

Customer: replied 5 months ago.
a fixed amount every month, he is hoping to rent the property.
Expert:  Clare replied 5 months ago.

Then there are two choices, either ask your son to sign a Declaration of Trust confirming that he holds the property on trust for you both in whatever shares are agreed; or you can have a formal charge over the property - like a second mortgage.

Since it is a loan which is repayable this will not be relevant so fat as Inheritance Tax is concerned the outstanding amount will simply form part of your estate

Please ask if you need further details

Customer: replied 5 months ago.
Thank you for your reply. We are thinking of legal charge to secure our loan. Would declaration of trust also be advisable? Would you be able to recommend a solicitor to draw up a staight forward charge or can we use legal form con30a ourselves and pass it to our son's solicitors for registration. We will not be charging interest on the loan.
Expert:  Clare replied 5 months ago.

No you do not need both

You can deal with the form yourself if you wish!

Customer: replied 5 months ago.
Final question, my son is single should he get married, the legal charge registered at land registry will protect our loan against third party beneficiary rights.
Customer: replied 5 months ago.
I haven't received my response to the above enquiry, are you able to advise me please.
Thanks