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Senior Partner
Senior Partner, Solicitor
Category: Law
Satisfied Customers: 13330
Experience:  Solicitor with more than 30 years experience
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More than 7 years ago my parents transferred their house to

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More than 7 years ago my parents transferred their house to my brother in order to avoid inheritance tax. They now see this to have been a serious error of judgement and have asked him to transfer the house back to them so they can modify their wills and make them more equal between their 3 children. He has refused.
I would like to know if there is an legal course of action that can be taken by my parents to make my brother sign the property back to them.
He says he has put it in trust for his children but as it is his only asset we feel this is highly doubtful. He has also recently separated from his wife (to whom we are all very close) and has moved in with another woman, which dismays my parents and they worry about provision for my sister-in-law and her 2 children in the case of divorce.
We are concerned he is deeply in debt, his judgement appears to be very off and he seems to believe his own lies (he denies living with this other women despite all the evidence to the contrary).
My parents will not cut him from their will and want to make provision for him, but he is in possession of the most valuable asset which makes them very uneasy.
Thank you.
Hi thanks for your question. I am afraid if your parents made a gift of the house to your brother in order to avoid inheritance tax then they cannot now claim it back. A gift is not reversible and if they claim it was not really a gift then what they are saying is that they were trying to pretend for inheritance tax they had given it away but had not really done so. That is a tax fraud and the court will not allow it.
The only way of reversing it would be show that he had induced them to do it by coercion or fraud and that does not seem to be the case so any court case would fail
I am sorry to say this is common problem with inheritance tax avoidance that people find they have done something irrevocable. Did you parents get any advice before doing this? I there any possibility of making a claim against the advisers?
Customer: replied 2 years ago.
Thank you for your reply. It has confirmed what I suspected was the case.
My parents have been paying my brother rent during (and since) the 7 year period required for inheritance tax. Are they still legally required to do so or can he let them stay there rent free ? I assume that if he decided to sell the house they would have no rights and would have to move out ?
Is there any way of finding out if he has in fact put the house in trust for his children or if he has any borrowings against it ? He has applied for a legal separation from his wife, so does this require him to disclose all his financial information ?
Thank you.
Hi. They can stop paying rent by agreement. However this will result in them being treated as retaining a benefit and nullify the IHT treatment.
They have only the rights of a tenant but no other rights and can be evicted on sale if the tenancy can be terminated.
You can only find out about the trust if he has transferred title to trustees. If he has just executed a declaration of trust then no there may be no public record.
Finally yes he is obliged to make full disclosure in divorce and your sister in law can require it.
Customer: replied 2 years ago.
Hello, thanks for your quick response.
Final questions ! Does the rent paid by my parents have to be set at the 'going rate' or can a nominal rent be charged if they pay for any upkeep required to the property ?
They currently pay £500/month, so still a reasonable amount for 2 pensioners, but possibly not what the rent would be if it were through an agent.
Could my parents divert any of this rental payment towards my sister-in-law to help with the upkeep of the children or to contribute to the rent of the property they live in (and which he has left), or does it have to come via my brother ?
Thank you.
They ought to be paying market rent. Otherwise it is not effective for IHT purposes. The market rent can take account of the fact that they pay upkeep I.e. Be less than the rent where the landlord does all the repairs.
No your parents cannot divert the rent. of course your sister in law may have a claim to some of that income but she has to bring the claim against your brother . If he does not pay her maintenance for example she could get a right to some of the rent but it must be done by a court.
Senior Partner and other Law Specialists are ready to help you
Customer: replied 2 years ago.
Thank you for your help.