Protect the legacy

By THIS IS MONEY
Updated:

 

MY husband is 65 and I'm 55. My mother, 78 and my divorced daughter and her son, 9, also live with us. My daughter had to sell her property to pay a legal aid bill. Both myself and my husband decided to extend our property so we have borrowed on top of our existing mortgage. I will have to work until I am 65 to pay for housing four generations, but I do it with love. But if we die the family home will have to be sold because of inheritance tax. What can I do to secure my family? PC, London.

Kay Lowe, independent financial adviser at Equal Partners says: First, you should have life insurance in place to cover the mortgage debt on the property, and it should be written 'in trust' so that the proceeds would fall outside the estate on death.

The beneficiaries of this trust would then be able to clear the mortgage debt, securing the property.

As for inheritance tax the current threshold is £250,000. If your estate is below this value, there is no tax to pay to the government.

If the property and the estate generally, after paying off the mortgage debt, is above this, then life insurance can be considered again on a joint life, second death basis and once again put 'in trust' for the beneficiaries to pay the tax due and therefore, once again, safeguarding the property and their home.

For proper peace of mind, you need face-to-face independent financial advice.

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