Inheritance tax worry
Q My father died some years ago and my mother is 95. She still lives in our family home, which has risen considerably in value over the years, and I understand that when she dies, inheritance tax will be payable on her estate. I’m concerned that the house might take a while to sell. would I have to pay the tax straight away, or can I delay it until the house is sold? A Inheritance tax usually has to be paid by the end of the sixth month after a person dies. However, if the bulk of the estate is the value of the house, you can pay in instalments for up to 10 years. You’re unlikely to need that long – the 10-year period is mainly used by people who want to keep the family home – but it means you don’t
need to find the whole sum before the house is sold.
The tax payable is divided into 10 equal instalments
– the first due at the end of the sixth month after your mother died, and the second a year later. However, interest is charged on that second instalment and the subsequent ones, so it would be a good idea to try to have the house sold by then.
Bank of Mum and Dad
Q our daughter is desperate to
buy a flat but is struggling to
save the required deposit. we have savings and would love to help, but we need to be sure we’ve provided for ourselves in later years, too. A One option is a family mortgage. Different lenders operate these in slightly different ways, but the basic idea is that your savings can be set against the mortgage, as security. You put the money into an account and can’t take it out until your daughter has paid off a certain amount of the mortgage – but it’s still your money and as long as she doesn’t default on the loan, you will get it back.
A number of lenders offer this type of mortgage now. Do bear in mind though that if your daughter can’t make her payments, you could lose your money.
Q I recently discovered that my 83-year-old aunt was persuaded to switch her free current account to one that costs £15 a month, but comes with travel insurance and car breakdown cover. She’s been paying that for three years – but she stopped driving two years ago and the travel insurance doesn’t cover anyone over 80. Can she claim her money back? A Yes. These ‘packaged’ bank accounts have been sold very aggressively in the past few years, but bank staff are supposed to check whether the account is suitable for the customer before they sell it, then check it’s still suitable once a year after that. If they don’t – as here – it’s a clear case of mis-selling. Your aunt can claim back what she’s paid, plus interest of 8% a year. If the bank won’t pay, she can take her case to the Financial Ombudsman (find out how at financial-ombudsman.
org.uk, or call 0800 023 4567).