Can I sell the home my husband left me for my lifetime?
The terms of his will state that I have use of his home, which was our marital home, for my lifetime and then it would pass to his grown-up children. However, as we didn’t marry until later in life I already had my own home and I have moved back there.
I would like to rent out my husband’s house. The problem is it is in a terrible state and I don’t have the money to pay for any repairs. It’s already been standing empty for 12 months because I cannot let it out in its current condition. My stepchildren do not speak to me and are not prepared to help with the cost of the repairs.
My understanding is that if I pay for all the repairs and then keep the house until I die, my estate will be liable for taxes on the property even though it is my stepchildren who will get the benefit of the home.
In order to avoid the cost of repairing the house and the potential inheritance tax (IHT) bill when I die, I would like to sell the property and divide the value between myself and my late husband’s children, keeping a third for myself.
Am I allowed to sell the home and keep some of the proceeds? And is there a way to reduce the tax that will be due when it is sold?
"From what you have said, I believe you are unable to sell the property without the permission of the other beneficiaries, your husband’s children. Whether you are entitled to any of the proceeds will depend on what was said in your husband’s will and the nature of your life interest in the property.
It could be that you have a right of occupation only. This would also affect your ability to rent out the property.
You really need a solicitor to take a look at the will and work out exactly what your husband’s wishes were for you and the property.
As for IHT, I am afraid you are right with your assumptions.
As you have an immediate post-death interest in the property, its value would become part of your estate when you die. This could mean IHT is due if your total estate is worth more than the IHT threshold.
However, as the surviving spouse, you will benefit from at least part of your husband’s IHT allowance.That means some of his £325,000 inheritance tax allowance will be added to yours, meaning less of your estate will be liable to go to the taxman.
As yours is a very complicated situation, I would strongly advise that you seek legal advice. A solicitor will need to take a look at your husband’s will and get a lot more information from you before they can accurately advise you on the best course of action."
Abha Pandya is a barrister at Taylor Rose Solicitors.
The tax levied on the total value of your estate after you die. IHT has to be paid by the beneficiaries of your estate before they can receive any of the money from it. The money can’t be taken from the value of the estate _– it has to be paid before any money can be released. There is an IHT threshold – known as the “nil-rate band” – below which no tax is levied (£325,000 in 2011/12). Any amount above the nil-rate band is subject to tax at 40%. If your estate totals £600,000, there is no tax on the first £325,000; however your estate will pay 40% tax on the remaining £275,000, a total of £110,000. Prudent tax planning can reduce your IHT liability, so always consult a specialist solicitor.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.