If you are inheriting your family home, you may have many questions about how this works. What if you want to live in the property? What happens where you must share the inheritance with your siblings? In this article, we look at some of the most common questions we are asked about inheriting a family home in Scotland.
How long will the process take?
In Scotland, the executor must wait at least six months after the date of death before they can distribute all estate assets. The reason for this is to ensure that all assets have been discovered and all debts have been paid.
How long the process might take in reality will depend on many factors. Firstly, it will depend on the complexity of the estate and, in particular, the nature and extent of the assets. Secondly, if you have siblings and you are inheriting the property together, this can cause additional complications.
When siblings inherit a property after the passing of a parent, it is common to sell the property and split the proceeds. Alternatively, some siblings choose to rent out the property and divide the rental income. All such decisions have tax implications which should be taken into account.
What happens if one sibling wants to live in the family home?
The situation becomes more complicated if one sibling wants to live in the family home, and in many cases, it can cause disputes.
The best option is to come to an agreement. If the sibling who wishes to live in the house can afford to ‘pay out’ the others, this may be an option. Alternatively, they could ‘rent’ the property from the other siblings.
However, where one sibling wishes to keep the property, and the others want to sell, those who wish to sell may be able to apply to the court for an order to enforce a sale. This is a complicated area of law, and you should seek specialist legal advice on your specific circumstances.
Inheritance tax matters
There are certain inheritance tax benefits to passing on a family home. In the current tax year 2021/2022, the inheritance tax threshold is £325,000. This means that no inheritance tax is due on the first £325,000 of the estate. Many people will reach and exceed this threshold with property prices rising, even if they did not expect to.
However, there will be an additional tax-free allowance if a main residence is left behind to descendants, such as children or grandchildren.
The residence nil-rate band provides an additional allowance of £175,000 on top of the £325,000 threshold where a main residence is passed on. The residence nil-rate band only applies fully to estates worth less than £2 million.
Specialist Estate Planning Lawyers, Edinburgh
Murray Beith Murray Partner, Andrew Paterson, heads our Executry group and has assisted many families with the legal issues arising following the death of a relative. If you have any questions about the issues covered here, or if you wish to discuss any other legal matter, please complete our contact form or call us on 0131 225 1200.
At Murray Beith Murray, we're more than just lawyers - we're trusted advisors. We clearly outline the executry process, providing straightforward, practical advice and assistance. Our approach to client service is friendly and responsive, and we operate with the highest standards of integrity and professional expertise.