The old boys changing his will again.

[Boomerang]

Father 84, is wanting to change his will. everything is currently left 50/50 between myself and sibling.
60 acres plus house buildings. he has decided with siblings help that it's worth 1million and wants to split land 40acre to my none farming sister and 20 acre plus house buildings to me. (My living is derived from the 20 acres plus equipment )
Hes going to split 3 of the 5 fields up so each will be part owned by us both .
She's not short of £££ but seems desperate to get the land in her name ,
Hes suggested I pay her off now hes thinking 40 x 10k .(professional valuation would be first move .)
So 60 acre plus house /buildings will cost me 400k ish . Return off all the land ,(rented out ) 20kish plus bps.
Is this wise ? If iht rules change between now and his demise ,I could be left with tax bill
I'm really not sure which way to jump,pay her off now, or wait till dredded day arrives then either pay her off or sell it up. At late 50s I dont want a load off grief,
I've no one to leave it too, and could just about get away without borrowing to fund it.
In the current climate cash is soon ,if not already to be worthless.
But what could land values do between now and when the old boy goes.
Opinions vary from a fall , to a move upwards , I see savilles are expecting a fall once bps goes.
Unfortunately I think hes trying to do what be thinks is best, but hes being prodded from sibling, and I think splitting fields is just asking for trouble. there is no reasoning with sibling ,always right .
Family wills and £££ = nightmare.

 

[Surgery]

To start with splitting fields on its own will cost a few bob with land registry and solicitors

 

[Werzle]

If you have the money pay her and be done with it. Being left property jointly with someone else is a nightmare, clean breaks are best. Once you have it sorted get power of attorney over your father so he cant bugger it up later on

 

[Clive]

land values are going to rise - a lot imo

money is cheap

IHT changes will be irrelevant if your farther sells it you before his death - ask him to goft the remaining 20ac now as well as part if the deal to buy ? the 7 yr clock starts then which of iht changes will be useful

no brainer to buy asap really, especially if you can without borrowing unless you have anything better to do with 400k

 

[HolzKopf]

Who is advising him? A decent friendly lawyer that knows how the family operates should have a word in his 'shell like'. Gut reaction for me is that you're risking a lot to stay where you are already? If you don't need to borrow to fund the £400k then relatively bog-standard ifa driven investment would see income (which is what you need) at similar levels. Why do you need the stress?

HK

 

[PSQ]

Is it really worth 10k per bare acre?

Splitting fields 50/50? Sounds like a recipe for playing silly buggers and resentment in the not too distant future, and an attempt for ‘someone’ to maintain control over the other 2. The ‘someone’ isn’t clear yet, it could be you or your sibling holding the whip hand, but it sounds like it’s going to be painful.

Edit: do you currently lease the land from your Dad by any chance?
It would lead to ‘security of tenure’, leading to a tenants valuation of roughly half open market value?
Or, at least mean you have to pay your sister a rent until you’re ready to retire, at which point you both cash in the land value at that point.

 

[farmerdan7618]

It seems that you and sister don't always get on, and in this instance leaving everything joint between you might not be the right thing, so at least father is trying to split it so you both have a bit of clarity. Might not be the wrong thing.

As to buying sister out now, if you can get the finance and think it's a reasonable deal, then why not?

 

[steveR]

If the old chap gifts you and your sister the lot now, then you may escape IHT a bit... However, it really does need a Solicitor to give good advice.

IANAL, but from my experiences about such matters, your Father's affairs really need some good tax advice as you allude to if he wants to go down that route. If you were to buy the land and property now, presumably, the monies all go into your Father's estate when he dies. There is not a chance in hell that I would be party to a "paying off" of the Sister now, without some cast iron guarantees, and in my view the only way that is secure, is if you already own the property.

Buy the land/property off your Father at an agreed sum now, and he can then leave the cash to whoever he likes?

One issue in doing this is no Reliefs would attach to your Fathers estate...

You are then clear to cash the lot in if you like then at any time, no hassles with legals, sister etc.....

As for splitting fields...!!! Expensive buggeration....

 

[neilo]

What if he changes his will again, after you’ve paid her out?

Can you buy the 40ac off your father, then he gives her the money and buggers off? At least then your not paying over £400k and still at risk of him changing the will to leave it to her anyway.

 

[chaffcutter]

Don’t buy it off Father, that would mean no APR on his death. Get him to transfer to sis, but try to avoid splitting fields, we have just experienced this problem when one party wanted to sell to us her share, but her brothers refused to let her and she had to sell to them, which she didn’t want to do. Bad idea. Would sister sell it to you, or want to retain it? Is there any possible hope value on it for housing or industrial development in the future?

 

[2wheels]

so you buy out your sister just now, he needs care home and you have to foot the bill? you will be left with bugger all.

 

[puppet]

Why would you buy something that you are going to inherit in a few years? He is asking you to buy out your sister but she does not actually own it until he dies. You could all fall out and get nothing.
By all means agree a price to pay her in the future but sounds as if she wants the land.
She may have plenty money but sounds like you also have £400k available. Have you been paying rent on house and land you use for business? Your father may feel that you have a substantial benefit from that.
Cash is never 'worthless' but an asset can also depreciate.
End of the day it is your father's property and he should have a chat with both of you as to his thinking. I am sure he would not want either of you to be caught out by avoidable IHT so make sure he has spoken to lawyer and accountant

 

[Boysground]

You probably all need to actually sit together and talk about it. It best sorted now
Most important thing is make sure Power Of attorney is sorted for your dad, do yourself at the same time.

I have just enabled it for my dad. You wouldn’t believe how fast he has deteriorated in the last 12 months.

Bg

 

[farmerm]

If father sells 40Ac to son and gifts the cash to daughter would there not be CGT to pay and then the daughter have to pay 40% income tax on the money she receives? No tax relief

Does father need to live in the house or draw an earning from the business, if either he can gift neither the 20ac or the house as HMRC would discount that the asset was ever gifted if he continues to benefit from the asset. If father holds the remaining 20Ac and house, depending on the size and quality of the property HMRC could take the view the remaining assets no longer qualify as a farm for APR purposes, assuming APR still exists at time of death...

Is that about a life insurance policy route that could be used as a vehicle to pass a fair sum of cash to your sister?

The difference in tax liabilities between getting it right and getting it wrong could easily be equal to what 6 numbers on the national lottery wins!

 

[Grassman]

If your already making a living from what you have why have the hassle of buying the other. Especially if you have no one to leave it to.

 

[Davey]

Whatever you agree make sure its in writing!

I learned the hard way from my own dad that what they say to keep you happy/working your arse off, and what they actually do, aren't always the same thing.

 

[Dry Rot]

A good solicitor would be worth his weight in gold. Not just to sort out the legal niceties but to give good impartial tactful advice to your father.

 

[Goweresque]

You probably all need to actually sit together and talk about it. It best sorted now
Most important thing is make sure Power Of attorney is sorted for your dad, do yourself at the same time.

I have just enabled it for my dad. You wouldn’t believe how fast he has deteriorated in the last 12 months.

Bg

+100 for PoA. If the OP thinks he's got a problem now, try the same position and an elderly person slowly losing their faculties and unable to do any complicated stuff or refusing to make decisions. Having an LPA for my father was a godsend a few years back, I was able to continue various property deals to conclusion, the proceeds of which are now paying for his care. Without the LPA we'd have been in a terrible mess.

On the OP, if he buys the land now then someone is paying some CGT on the sale, either the father or the sister. Because if its given to the sister now and she sells it she will apply for hold over relief and her CGT base value will be whatever it is now for the father. And if the father sells it he will pay CGT on the proceeds, and the gift to the sister will fall under the 7 year rule for IHT, so potentially another wedge of tax lost. So whoever is the seller (father or sister) they are faced with a tax bill of 20% above base value, which will be the purchase value or the 1982 value, whichever is the most recent. If on the other hand one waits until death then (potentially) the CGT clock will be reset. But given there are just been a report to the Chancellor that proposed increasing CGT and imposing it on death as well, one would have to think that the tax situation for CGT and IHT is not going to improve over time, and it would be better to sort things out now, while the tax position is clear, rather than wait.

Edit: the CGT rate could be 10% if either party qualified for Entrepreneur Relief.

 

[Cab-over Pete]

If you have nobody to leave any share to, why not try to come to some sort of agreement to leave it to your sisters kids upon your death?

Alternatively, get you dad to leave it to them now with some sort of legal agreement that you live in/on your bit rent free until such time you turn up your toes or can no longer cope living there.

Both of those things have been done with farms and families I know.

You’ll soon find out whether your sister thinks of others or is just selfish.

 

[dudders]

Sounds like you might not be farming it now, if you're making a living from the buildings. If that's the case, you won't get APR anyway.

Look into putting the whole lot into a family trust, the two of you as trustees, but with you having the major say-so and a lifetime tenancy of the whole place.

Bear in mind you might not have anybody to leave stuff to right now, but that could change - you're not too old yet!