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bigduckontax, Accountant
Category: Law
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my son in laws mother died last year and in her will she wanted

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my son in laws mother died last year and in her will she wanted it to go to him(he is an only child)her husband is not the father, she was left a widow when he was very small and she was left enough to put a deposit on the house (they were married at this point)by her previous husband. the second husband has not really contributed to the mortgage repayments as she has always worked, she was left enough to clear the mortgage by a gentleman who she was caring for in her own home when he died. the solicitor said the house had to be shared 50/50 between my son in law and his stepfather .Now the stepfather wants to make a deed gift to my son in law but he has been told that he cannot use his own solicitor because the deeds are held by his stepfathers solicitor.Is this true please also where would my son in law stand with inheritance tax although idont think the value of the house would exceed the allowance. thank you
Submitted: 4 years ago.
Category: Law
Expert:  bigduckontax replied 4 years ago.
Thank you, XXXXX XXXXX Keith and I will try to help you with this question. Inheritance Tax (IT) threshold is currently 325K for deaths in the period 6 April 2013 to 5 April 2015. If the estate is below this limit there is no IT on death, any amount above the limit will be taxed at a straight 40%.

I would have thought that if the stepfather needs to gift the property to your son in law it is he who has to do this, not the son in law. It is not the son in law's property to gift. If the donor has not lived in the house this gift could trigger a Capital Gains Tax assessment, but this is beyond the scope of the question. There is also the possibility that the gift will create a Potentially Exempt Transfer (PET) for IT purposes in the donor's estate. This tapers off over 7 years when it is reduced to zero. PETs are added back to the donor's estate on death within 7 years of the gift and aggregated to form part of the IT computation. If the donor's estate has inadequate funds to meet the PET element this liability cascades down to your son in law. The solution is, of course, a Decreasing Term Life Insurance on the donor to protect the position.

I hope I have been able to throw some light on your problem.
Expert:  bigduckontax replied 4 years ago.

This question has suddenly displayed again and my answer has yet to be read by the questioner. I will await developments! I see, now read!