On 16/06/2025 16:55, Dave wrote:

Hello, a friend’s uncle has just died and she is helping the family sort out the will.

Essentially the estate consists of a £1M house and £170k cash all held in a residuary trust.

The trustees are my friend, her brother and their parents.

The problem is that the house has suffered from subsidence which may be continuing. They have been advised that if they fix the subsidence damage, the house will be worth £200k more.

The question is can they or how do they do that with the estate? Can they
use the cash in the estate for this purpose although a lot of that will go
in inheritance tax.

My friend thinks that the executors can transfer the house to her as that would be the most tax efficient way of completing this work.

I think that sounds somewhat dubious as there is the potential then that other trustees would lose out.

Do any of you have any advice please apart from seeing the right sort of lawyer.

She’s asked some questions of CatGPT … Although when I asked her if she’d
told it to use English Law, she hadn’t thought of that (it isn’t the friend
I wrote about a few months back).

Any advice most welcome. Thank you.

It would be clearer if you set out roughly who the beneficiaries are.
Who gets what.

Why is the subsidence not covered by insurance?

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)

On 16/06/2025 21:01, Dave wrote:

GB <NOTsomeone@microsoft.invalid> wrote:

On 16/06/2025 16:55, Dave wrote:

Hello, a friend’s uncle has just died and she is helping the family sort >>> out the will.

Essentially the estate consists of a £1M house and £170k cash all held in a
residuary trust.

The trustees are my friend, her brother and their parents.

The problem is that the house has suffered from subsidence which may be
continuing. They have been advised that if they fix the subsidence damage, >>> the house will be worth £200k more.

The question is can they or how do they do that with the estate?

Can they

use the cash in the estate for this purpose although a lot of that will go >>> in inheritance tax.

My friend thinks that the executors can transfer the house to her as that >>> would be the most tax efficient way of completing this work.

I think that sounds somewhat dubious as there is the potential then that >>> other trustees would lose out.

Perhaps, you could outline your friend's plan. I speculate, but:

If the trustees fix the subsidence then sell the house for £1.2m, cf £1m probate value, that £200k capital gain then creates a tax bill for the
estate.

Instead, the other beneficiaries give up their interests in the estate,
and your friend is made sole beneficiary. She gets the house to use as
her principal private residence, she does the repairs, sells the house,
and makes that £200k profit tax free. And, then, she'll decide to gift a quarter of the house value to each of the other beneficiaries.

I suppose they might get away with it.

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)

GB <NOTsomeone@microsoft.invalid> wrote in
news:102q2a6$1sqbc$1@dont-email.me:

On 16/06/2025 21:01, Dave wrote:

GB <NOTsomeone@microsoft.invalid> wrote:

On 16/06/2025 16:55, Dave wrote:

Hello, a friend’s uncle has just died and she is helping the
family sort out the will.

Essentially the estate consists of a £1M house and £170k cash all
held in a residuary trust.

The trustees are my friend, her brother and their parents.

The problem is that the house has suffered from subsidence which
may be continuing. They have been advised that if they fix the
subsidence damage, the house will be worth £200k more.

The question is can they or how do they do that with the
estate?

Can they

use the cash in the estate for this purpose although a lot of that
will go in inheritance tax.

My friend thinks that the executors can transfer the house to her
as that would be the most tax efficient way of completing this
work.

I think that sounds somewhat dubious as there is the potential then
that other trustees would lose out.

Perhaps, you could outline your friend's plan. I speculate, but:

If the trustees fix the subsidence then sell the house for £1.2m, cf
£1m probate value, that £200k capital gain then creates a tax bill
for the estate.

I feel the value of the bequest is fixed at the date of death so any CGT
would apply to the beneficiary, even if the estate bore the cost of the repair/improvement. Would the cost of building works diminish the value
of the estate for IHT purposes?

This is an estate that will have a heavy inheritance tax bill so the 200k
gain will become £120k with building repair costs diluting that figure substantially. Given that I would take the current value and run.

Instead, the other beneficiaries give up their interests in the
estate, and your friend is made sole beneficiary. She gets the house
to use as her principal private residence, she does the repairs, sells
the house, and makes that £200k profit tax free. And, then, she'll
decide to gift a quarter of the house value to each of the other beneficiaries.

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)