"Inheritance plan will end up costing everyone money"

[Brendan Burgess]

An interesting question in the Irish Times. It shows how people can really make their will very complicated.

"My mother has written up documentation in her [broken link removed] that states when she passes on I will inherit the [broken link removed] in return for me selling my apartment and distributing the funds from this sale equally to my five siblings.

She will be stating that I inherit the family home for whatever price I get for the sale of the apartment and then simply distribute the funds equally to my five siblings."

Let's take this at its simplest.

Assume that the mother's house is worth €300k and the son's apartment is worth €200k and is mortgage-free.

The mother wants the son to get her house.

How would you word the will?

"I give my son John the right to buy my home from the Executor for a price equivalent to the market value of his apartment.
I distribute the remainder of estate equally to my other 5 children."

Brendan

 

[Thirsty]

Simpler solution:

leave 50k to each to siblings 2,3,4,5 and the family home to sibling1.

Sibling 1 can then either sell apartment or family home as they choose to pay siblings 2-5.

or better still - direct that the family home is sold and divided with 2/5 to sibling 1 and 1/5 to siblings 2-5.

if Sibling1 wants to buy out the other's share they can do so.

 

[jpd]

You can't leave 50K to each AND family home to one - the estate does not have 250K plus family home

 

[Brendan Burgess]

Ah, I might have it.

"I leave €50k each to my children 2- 6 and the remainder of the estate to my favourite son John."

So the Executor would have to sell the house and he could sell it to John.

Or a bit more complicated "I leave each of my children 2-6 a sum of cash equivalent to 1/5th the value of my son John's apartment and the remainder of my estate to my son John."

Brendan

 

[Gordon Gekko]

It’s simpler than that:

- House worth, say, €500k
- Apartment worth €200k
- Son pays €200k of cash into the Estate by selling his apartment
- He then gets the house (€300k of value)
- The siblings split the €200k of cash
- No CAT payable

They should get legal advice.

 

[1dave123]

Would this work

"I leave my house to Sib1 subject to Sib1 paying an amount equal to 1/5 of the house value to each Sib 2-5 within 12 months" .

It's would be up to Sib1 how they raise the required funds (i.e Sib1 could sell the apartment or some other asset or get a loan).

As I understand it .. but open to correction ........... the payment made by SIb1 to the other Sibs would be deemed to be from the mother so Cat A threshold applies to all of the siblings.

 

[NoRegretsCoyote]

"I leave my house to Sib1 subject to Sib1 paying an amount equal to 1/5 of the house value to each Sib 2-5 within 12 months" .

I think the point here is that the house is more valuable than sibling 1's apartment.

Parent wants sibling 1 to get the house and siblings 2-6 to get the value of sibling 1's apartment.

 

[1dave123]

@NoRegretsCoyote I see your point ..... but would you happen to know (for my own education) if my understanding of the CAT rule is correct?

"the payment made by SIb1 to the other Sibs would be deemed to be from the mother so Cat A threshold applies to all of the siblings."

 

[NoRegretsCoyote]

@NoRegretsCoyote I see your point ..... but would you happen to know (for my own education) if my understanding of the CAT rule is correct?

"the payment made by SIb1 to the other Sibs would be deemed to be from the mother so Cat A threshold applies to all of the siblings."

Not sure. I don't know the specific legalities.

But in substance, effectively the payments from Sibling 1 to Siblings 2-5 is their inheritance from the mother, yes.

 

[Brendan Burgess]

in substance, effectively the payments from Sibling 1 to Siblings 2-5 is their inheritance from the mother, yes.

But the answer in the Irish Times says that they will be from sibling to sibling.

So the key point is to make sure that they are from the mother.

 

[Brendan Burgess]

- House worth, say, €500k
- Apartment worth €200k
- Son pays €200k of cash into the Estate by selling his apartment

That is simple but I have not heard of people paying anything into an estate before.

Another approach may be :

"The house to be sold to my son John for the price his apartment is then worth. The rest of my estate to be divided equally among the remaining 5."

I presume that if you can leave a house to someone, you can insist that it be sold to them.

Brendan

 

[Gordon Gekko]

That is simple but I have not heard of people paying anything into an estate before.

Another approach may be :

"The house to be sold to my son John for the price his apartment is then worth. The rest of my estate to be divided equally among the remaining 5."

I presume that if you can leave a house to someone, you can insist that it be sold to them.

Brendan

You see it sometimes where families want to re-jig who gets what.

 

[Cervelo]

Son pays €200k of cash into the Estate by selling his apartment

But what if the mother has already used up her gift/inheritance allowances/limits or does this not apply in this situation ??

 

[RedOnion]

You see it sometimes where families want to re-jig who gets what.

Yes, it used to be common in farm inheritances, where the farm was the only asset. The farm was left to one child subject to payments of X to each sibling.

 

[Gordon Gekko]

But what if the mother has already used up her gift/inheritance allowances/limits or does this not apply in this situation ??

Then she has. We don’t know, do we?