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Hi, I am currently studing for taxation exams and have come across the following situation in one of the text books and was wondering if anyone had any ideas on it:
A man dies and leaves a will and in this will he leaves the house and its contents worth 200k. Also he has a # of insurance policies, bank a/c's, stocks and shares, etc worth 100k, ie estate = 300k.His neighbours (3 of them) have been good to him so he has left everything to the 3 of them.
Mary (mother) was to get the house for her life, on her death the house passes to Billy (her son) absolutely on condition that Billy has reached 21yrs. The residue (100k) was to be divided equally between the 3 (John is the other person), however Billy was only to get his share on reaching 21yrs. Mary is 55yrs, Bill is 20yrs and John is a 1/3 share. Mary gets 1/3 and house.
Solicitor advises Mary to disclaim her life interest, Mary is concerned that if she does this she is going to accelerate Billy's entitlement to the house. She does not think Billy is mature enough to handle the house. Is there anything else that can be done by Mary above to;
(1) Relieve the tax burden
(2) Solve everyone else's problem
I understand what the tax liability would be for each of the above as is but not sure what action Mary can take to relieve the tax burden.
A man dies and leaves a will and in this will he leaves the house and its contents worth 200k. Also he has a # of insurance policies, bank a/c's, stocks and shares, etc worth 100k, ie estate = 300k.His neighbours (3 of them) have been good to him so he has left everything to the 3 of them.
Mary (mother) was to get the house for her life, on her death the house passes to Billy (her son) absolutely on condition that Billy has reached 21yrs. The residue (100k) was to be divided equally between the 3 (John is the other person), however Billy was only to get his share on reaching 21yrs. Mary is 55yrs, Bill is 20yrs and John is a 1/3 share. Mary gets 1/3 and house.
Solicitor advises Mary to disclaim her life interest, Mary is concerned that if she does this she is going to accelerate Billy's entitlement to the house. She does not think Billy is mature enough to handle the house. Is there anything else that can be done by Mary above to;
(1) Relieve the tax burden
(2) Solve everyone else's problem
I understand what the tax liability would be for each of the above as is but not sure what action Mary can take to relieve the tax burden.