grandchildren inheritance query

[ellenb]

MIL has said that she thinks she should change her will re our current situation.
At present, my DH would be one of her children to inherit. Her husband (my FIL) passed away some years ago.
Have no idea how much is involved but would imagine between €20K and €75k but might be more maybe up to €150k?
We are considering bankruptcy in Ireland in next 12 months if our situation does not change radically. We do not wish to go to UK so if we could stick with Irish law for moment.
MIL is suggesting she changes will so that our children, her grandkids, inherit instead of her son (my hubbie).
We don't even know if we will have to go down bankruptcy route or not-if house sells may get debt forgiveness but if not it will have to be bankrupt route. We wanted to know in event that we do have to go bankrupt, would inheritance to hubbie or grandchildren be used to pay o/s debt? How long a period of time would that be for?
Or if left will alone, could hubbie say no to inheritance or gift it to kids instead or is he bound to pay back on o/s debt?
Before anyone goes on about how we owe the money-yes we know that but we will have been left with nothing. We have one family home, no other properties and both unemployed and trying to sell but nothing much happening. Unlike rich developers etc, we have no offshore accounts or money squirreled away safely.
So if we have to go bankrupt, the house would need to be sold, even with NE involved, the bank would have got most of their money back (approx 70% of o/s mortgage based on current market rate) and got rid of a loss making tracker mortgage.
I can cope with DH and I having nothing and starting from scratch but we will most likely never get another mortgage again and it means we will now have nothing to leave our own kids. Therefore knowing they had something down the line, would make us feel alot better.
Any thoughts?
She has also mentioned possibly buying a cheap house for the grandchildren. Can she do this? Does it need to be in trust? If trust, would that be considered our asset to pay back on debt? We wouldn't want that, obviously. Would we be allowed to live there? Could we pay rent to the kids?
All of this is probably very pie in the sky-she is desperate to come up with solutions for us and desperate suggestions are coming forward from all over the place.
No, she isn't prepared to pay anything off our current mortgage (long story), no more than we would accept it even if offer made, anyways.
Any thoughts??

 

[wbbs]

Mother-in-law, Darling Husband, Father-in-law, Negative Equity

 

[beffers]

Under the current Dept of Revenue guidelines, each one of your kids can receive 30,150 euros worth of cash/property/stocks etc etc from a grandparent before they have to pay Capital Acquisitions Tax on them.

(Link to threshold levels here: http://www.revenue.ie/en/tax/cat/thresholds.html )

Once the 30,150 threshold level has been passed, CAT tax at a rate of 25% applies. This threshold level applies whether or not the kids receive the funds in an inheritance after their grandparent has died, or as a gift when the grand parent is still alive. If the cash is left to them as a lump sum, the CAT tax would be applicable on everything over 30,150.

If your MIL plans on buying them a house, she should get professional tax advice. It may be that their individual shares of it are under the 30,150 threshold, but owning a piece of property is always more complicated than a big ole wad of cash, so you can't be too careful there.

If your mother in law leaves anything to her grandkids, its is theirs to do with as they wish. They can not be made to give it to you & your husband to pay off your debts. If your hubby decides to renounce any inheritance in favour of his kids, he may run into trouble doing so. This is especially true if there is a civil judgement against him (such as a bankruptcy) as any monies that he comes into, will not automatically be his to do with as he pleases.

If he is able to renounce an inheritance in favour of his kids, then the kids will inherit directly from their grandmother, and the CAT inheritance tax issues mentioned above will still apply. It would probably be better for your MIL to avoid putting your hubby thru all that hassle, and just leave the property to the grandkids in the first place.

Bear in mind that the CAT threshold figure of 30,150 may change if the government decide that they want a bigger slice of peoples property. The CAT threshold levels have been coming down for years now, so there is no way of knowing where they may be at 5, 10, 15 years from now.