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I find as an older Landlord that being a Director of a Company a very good thing
If you hold Property in your own name and you die and you have outstanding Mortgages you loved ones will have the task of sorting out the estate ie paying off the mortgages etc
If you hold Properties within a Company, your loved ones don't have to re arrange Mortgages
Lets Say you die on a Sunday Monday Morning nothing changes the Company can go on as it did in the same way as it did when you were alive
I think this is a huge Bonus on succession planning and its a one less headache for your loved ones to face
As I age and My Company pension is in payment I will look at the best way to pass shares into a Family Trust for my loved ones to avoid as much IHT as I can.
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
My experience is it is not quite so simple. Assuming the company does not qualify for BPR, the deceased's shareholding needs to be valued and IHT paid. If the estate has cash lying around then this can be used but otherwise it means selling a property, paying CT and dividend estate income tax just to pay IHT.
Incorporation per se is not an IHT solution. We usually arrange life assurance to cover these issues or in larger cases more complex IHT friendly structures.
Don't get me wrong I'm in favour of BTL through a company (I do it myself) but for income tax reasons not IHT reasons without serious plans in place.
The company lives on but the IHT liability remains.
Chartered Accountant, Tax Advisor and Mortgage broker
(and BTL portfolio owner)
This thread was not really about IHT really
it was looking at the issue of outstanding mortgages after an investor passes
you cant really avoid IHT in the UK but you can manage it via life insurance and pensions planning
of course you can pass on your wealth early as the rich have done for years
its all about planning
but don’t forget HMRC has arrangements for IHT for land and property so if investment have good cash flow it can pay the tax over a number of years for personal held assets
I think for me a company is very helpful in lots of ways to plan
We seem to be aligned. I personally think that iHMRC will need to consider allowing payment over time for more personal assets such as family investment company shares. That said they will continue to look at (and fail at) stopping trust structures for IHT.
Mortgages in a deceased estate can be a problem. Lenders are sympathetic and give time but not forever. Sometimes I wonder if addding on someone with a small TIC interest would solve the time issue but of course that has other issues.
I spoke to a number of lenders and I think most were helpful
i have made strong ties with a major bank. For this very reason it’s an avenue that could be used they know my currant account very well
the key is life insurance as a back stop. To give the estate cash when it needs it to allow a re arrange of personal debts in trust of course
its all about management and planning and doing the best you can
DL, Its refreshing to see a post regarding company formation that isn't discussing tax.
I thought I had a good understanding of the options within a FIC, but reading Stuart's comments I may need to ask a few more questions, one of which will be life assurance options.
Gary, give me a shout on Monday.
i agree could to move off tax when one can.
This isn't correct .
True, most mortgages the director has to give a personal guarantee - so worst case scenario all the mortgages could get called in at once on the death of a sole director.
DISCLAIMER just my personal opinion - for legal advice consult a qualified professional grown-up.
My wife and I are both garantour for the company mortgage
but I have arranged decreasing term insurance which is affordable
the mortgages are all on repayment so the LTV will go down over time
my company levarage is under 60% at present and falling
when I spoke to the lenders last week they said if the company is to continue they did not see an issue
they may ask for the new directors to arrange garantour at that point in time if required
it may even be prudent to review co mortgages at that point in time as it maybe possible to get some in encumbered property into the company
in bussinss there is alway opportunity to do some thing
But It has to be easier in the long run when directors pass away
There is only so much we can do to help loved ones