My wife and I own a static caravan in our joint names that is worth £28,000. The owners of the caravan site have told us that we can set up for our two grown-up sons to own the caravan jointly and severally after our deaths by simply sending a letter signed by both of us and our sons saying that ownership passes to them.
Does this mean that the value at the time will not be included in our estate?
The easiest and cheapest way to pass on your property when you die is to do so by means of a will. If you don’t have a will, the law decides who inherits your property regardless of any letter the caravan park owners may have. In such a case, your sons may wish to challenge the law’s view of who gets your property and risk not winning the battle and incurring large legal fees.
If you and your wife get wills drawn up, you can say how you wish for your sons to inherit the caravan.
Upon your death, the total value of your assets less amounts owed to other parties such as credit card bills, debts and mortgages is assessed for inheritance tax. This is called your ‘estate’. Provided your estate is worth less than £325,000, there is no inheritance tax to pay. If all you own is your static caravan, then your estate won’t be subject to inheritance tax.
The act of sending a signed letter passing your caravan to your sons on your death doesn’t get you off the hook for inheritance tax.