Three generational family finance organisation for max efficiency

Discussion in 'Finance, Property, Law' started by thegimp, Nov 23, 2011.

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  1. Scene (HYpothetical)

    Retired parents sat on 400k house, no mortgage. same in investments/shares. Also two generous pensions

    One sister divorced two kids, house, big mortgage (arranged only with help from key worker scheme) mortgage interest only being paid. could not remortgage without large cash deposit or guarantor

    Son, property paying for itself in rent, large disposable income and spare 100 k cash


    Are there prefered ways of pushing the money round to optimise financial efficiency across these three family units

    Some time in the near future there will be nursing homes and death. How does one go about protecting and profiting from some financial jiggery pokery

    I know its a broad subject, but thoughts please
  2. Rod924

    Rod924 LE Reviewer

    Are you from Nigeria?

    Sent from my GT-I9000 using Tapatalk
  3. Go and see a Indepedent Financial Advisor.

    That'll be 25 Guineas please.
  4. just hope for death..cos the nursing home will gobble up the asset...collude with your sister..job!!
  5. Change HYpothetical to Hi-Velocity Sniper rifle, and you are quids in my friend!!
  6. I think the pillow case firmly applied is the best option, but having watched taggart, rebus and Morse I reckon it would be chokey time before next months crime stoppers
  7. Obviously all the smart finance boys are hard at the chang, driving their desks, smashing through till 2200, when they'll hit the town for high glass Ukranian whores, champers and more sniff

    Maybe they'll read the thread at the weekend
  8. The best jiggery-pokery is to rearrange nursing home and death.
  9. There's probably something that could be done about gifting the property to the children, renting it back and surviving >7 years to escape an Inheritance Tax Liability on the transfer - but it's probably better to take out life insurance on the oldies and then have them bumped off.
  10. Make sure the oldies have both names on the house, then when the first one pops off, their share of the property can be given to the two children, reducing the estate size when the second one goes.

    You can insure against care homes, but it is bloody expensive, they look at the health of the person and length of expected life in the home. One of my relies had about £140k estate, and they wanted £40k to cover. If they live longer than expected then you don't pay any further fees, but you don't get any money back if they die sooner than expected.
  11. walkyrie

    walkyrie Old-Salt Book Reviewer

    Plough all the cash into mortgage to save on interest.

    Transfer all the assets into a Ltd Co which can then be solvently liquidated, which can be more tax efficient. Though you'd need proper advice on whether you'd gain or not.
  12. The current IHT level is 325k (if one parent dies the 325 threshold is added to the remaining partner - called an inter spouse transfer) giving a threshold of 650k. So IHT would be due on the remaining 150k at 40% = £60000!!!!!!!! to the tax man

    The good financial advisor would probably advise - get the parents to change the mortgage to "tenancy in common" as opposed to "joint tenancy" that way if one pops off - their half can be left to the kids. (in trust until the remaining parent pops off). Its relatively cheap to do so dont get ripped off getting it done.
    (also make sure it is reflected in the will)
    Parents Could start making "gifts"(although there are limits to the max allowed) and hope they live another 7 years as IHT is still payable on a sliding scale from 7 to 0 years. There are lots of rules and a few other tricks to reduce Inheritance tax although the taxman has it pretty nailed down nowadays.

    Could the parents act as guarantor to the daughter to remortgage?
    Could you buy into your sisters property as a long term investment?
    Could you give me £100,000 (worth a try)?

    A good IFA should be able to advise -
  13. Not really - the rent would have to be at the market rate to avoid it being a Chargeable Lifetime Transfer, which rather defeats the point.
  14. The idea of becoming sister number ones land lord is fine on paper. She is paying interest only and couldn't afford half the mortgage on her single wage. She is basically paying rent on the place and will never own it........

    Unfortunately, after x number of years paying rent to big brother she would undoubtably have a sense of ****ing entitlement to either the property or the equity in it as it woud be being paid off.

    That and she'd probably chance it and not pay up frequently as she is a feckless ****.....making her homeless for non paymet of rent would go down like a dog shit sandwich and son number one could kiss goodbye to family relations
  15. Start with Billywhy and my suggestion about the house first. When the first one pops off, it's a paper exercise, the sister wont get any of the cash, and can't kick the remaining parent out.

    He might want to look at a trust fund for avoiding tax, but it does tie the money up and you can't get access to it. This may be an issue if they are currently using the capital to live off investments.