Inheritance Tax is the tax levied on a person’s estate who has died and is paid by the person who inherits money, property or possessions. In the UK, the standard Inheritance Tax rate is 40%; however, it is only charged on the part of the estate that is above the tax-free threshold. As of 2022/23, the nil band rate threshold is £325,000.

Inheritance Tax planning is a great way to plan for the future; typically, It allows a person to hand off some of their assets and finances to ensure that those set to inherit when they die do not have to face the costly burden of inheritance tax.

However, a recent court case highlighted the importance of ensuring your estate planning is detailed and comprehensive.

Eviction over Inheritance Tax Confusion

In a case recently in the media spotlight, a mother is facing eviction inflicted by her daughter, to whom she handed her flat over for ‘inheritance tax purposes’. Norma Gibbons, an 82-year-old who has lived in her upstairs/downstairs flat since 1962 and purchased the upstairs portion in 1980, transferred her flat into her daughter’s sole name (Dawn Gibbons) for ‘inheritance tax reasons’ in 2004. Dawn currently lives in the downstairs portion of the house in Earlsfield.

The mother and daughter agreed that Norma’s flat would be transferred into Dawn’s sole name in 2004 for inheritance tax purposes. Still, following a series of disagreements and court cases since 2008, Dawn is trying to evict her mother.

At the time of publication of this article, the case is yet to have a ruling in court. We expect to hear a verdict in late spring 2023.

Protecting yourself with Estate Planning

The case of Norma and Dawn Gibbons excellently highlights the importance of ensuring that an estate plan is comprehensive, detailed, and covers all bases.

Likely, this mother and daughter did not instruct the support of a solicitor when reorganising Norma’s assets for Inheritance Tax purposes. Subsequently, she is facing eviction.

Although this case is certainly not common, it is essential to note that both parties could have been better protected should their intentions have been properly laid out in an estate plan.

Furthermore, it is not typically advisable to gift property during a lifetime, as although it may be beneficial for inheritance tax purposes in the future, even the most comprehensive estate plans may not necessarily be enough to protect the original owner, such as in this case. Chloe Evans, Chartered Legal Executive at Larcomes commented, “We appreciate that for many of our clients Inheritance Tax may be a concern, however it is important for them to understand and appreciate the negative implications in gifting a property during their lifetime and the possible consequences of such actions.”

Estate Planning Solicitor

In the case of Norma and Dawn Gibbons, an estate plan should have included provisions for Norma so that, in the eventuality that she no longer had the right to live in her flat due to her daughter’s intervention or otherwise, she had alternative provisions that substantially protected her.

At Larcomes, based in Waterlooville and Portsmouth, we have an experienced team of trustworthy and knowledgeable inheritance tax planning solicitors who can support you in organising your estate to the finest detail, ensuring that all eventualities are considered.

To speak to a solicitor about your estate plan or inheritance tax today, please call 023 9266 8100 (Portsmouth) or 023 9224 6666 (Waterlooville).