Signing over house, savings (etc.) to sons to stop the Government getting it

organdonor · 7 December 2009 at 10:39AM

Hello,

My Mum (aged 76) and I were having a chat yesterday about her future. If she went into care or had care at home, I presume the Government would make her use her savings, then possibly make her sell her home in order to pay for her care. My Mum and Dad (deceased) worked hard for their savings and she dosn't want the Government getting their hands on it.

If she signed over her house and savings over to my brothers name and/or my name, would this prevent the Government getting their hands on her savings?

Is there any kind of time period where (for example) if she signed her house over 4 years ago and she needed care now, the Government could say the transfer of the house was too recent, and she'd still be forced to sell it?

What are the pros/cons to this kind of thing?

Any advice would be gratefully received...

Cheers.

margaretclare · 7 December 2009 at 10:47AM

So let me get this clear. I am close to your Mum's age so I have an interest in this type of question, which does come up with monotonous regularity.

To avoid an eventuality which may not even occur - how does your Mum know that she will ever need this kind of care that has to be paid for? - she is considering making herself destitute. And living on what, for the remainder of her life? She could easily survive another 20 years and remain fit and well all of that time. Having given away all that she has, is she prepared to live in poverty at a time of life when poverty is hardest to cope with?

We have all worked hard for our savings, every one of us, so that is not a valid argument.

Another point to consider is: your Mum may remarry.

organdonor · 7 December 2009 at 11:12AM

Maybe I didn't make myself clear. Mum would still live off her savings exactly as she does now and her life will continue as normal, with the exception that she will have no property or savings in her name. She is not 'giving it away'.

If - and obviously it's an 'if' - she ever needs care, she would rather the Government pay for it than use up her savings.

I seriously doubt Mum would remarry, but obviously that would change things. Let's assume she won't, however.

briona · 7 December 2009 at 11:30AM

organdonor wrote: »

If - and obviously it's an 'if' - she ever needs care, she would rather the Government pay for it than use up her savings.

That is the problem with this country – people are quite happy to save for that rainy day, and yet quite unwilling to use their savings when that rainy day comes! What else are savings for if not to use when things get tough?!

But, enough moralising.

organdonor wrote: »

Maybe I didn't make myself clear. Mum would still live off her savings exactly as she does now and her life will continue as normal, with the exception that she will have no property or savings in her name. She is not 'giving it away'.

I see two things you haven't considered:

1. If your circumstances change and you need to claim means-tested benefits, the savings and the house will be in your name, which may render you ineligible for any kind of State support...

2. If your mother should die within 7 years of "putting everything in your name(s)", you will still be liable to inheritance tax. Interestingly, if you "give" your children a gift that you still benefit from, it will still be liable to inheritance tax even if you live for longer than 7 years after gifting it... More info on the link below.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/InheritanceTaxEstatesAndTrusts/DG_179363

Briona

CLAPTON · 7 December 2009 at 11:35AM

However the pros are that you may inherit more money (that I doubt you've worked very hard for ) and the rest of us will pay for that.

the cons are:
-the money won't be hers any more it will be yours.
-if you are married (or have a partner) and you die then it becomes theirs to do what they like with it.
-if you divorce it will form part of the settlement
-you will be taxed on it as if it's yours.
-when you come to sell the house then you will pay capital gains tax
- the council will almost certainly see such an arrangement as being deliberate deprivation of assets as your mum will continue to live in the house etc
-if you have financial difficulties (especially if you go bankrupt) then the house will form part of your assets and may be sold.

organdonor · 7 December 2009 at 11:42AM

Thanks for the link, Briona. That's a good point about it affecting my status - something I stupidly hadn't considered.

I understand there are differing views about this sort of thing, but my Mum feels that those who are prudent and save for their old age and want something to pass onto their children are forced to use it to pay for (for example) a nursing home. Someone who had saved nothing during their life would be taken care of, whereas my Mum would have to use her savings which she wants to pass onto her sons.

I take your point that this money should be used for a 'rainy day', but I would say it's up to my Mum how her savings are used, and not the Government.

I genuinely appreciative that you have given my your advice even though you don't agree with our point of view. Thanks.

zzzLazyDaisy · 7 December 2009 at 11:50AM

http://www.ageconcern.org.uk/AgeConcern/transfer-of-assets.asp

1 download fact sheet 40 from the above link (top right)

2 read carefully

3 make sure that your mother gets independent legal advice from a solicitor not connected in any way with her sons

4 think again

organdonor · 7 December 2009 at 11:59AM

Clapton, thanks for the Cons list - they are all good points that we need to think about. However, please don't presume to know how hard the money was/wasn't worked for. Obviously I didn't work hard for it; my Mum and Dad did.

zzzLazyDaisy, I'll print out that PDF and give it a good read. Thanks for that. We intend Mum to speak to a solicitor soon. Right now I wanted background advice.

It's clearly not all Pros as we assumed, and I'm appreciative of the advice. It may be that it isn't an appropriate course of action, but we'll see.

missile · 7 December 2009 at 12:01PM

If you own your own home, you would also become liable for CGT on any increase in your "mothers" home.

My own mother is 86 and I would rather she used her savings to pay for whatever care she may need in her later years.

margaretclare · 7 December 2009 at 12:06PM

organdonor wrote: »

Maybe I didn't make myself clear. Mum would still live off her savings exactly as she does now and her life will continue as normal, with the exception that she will have no property or savings in her name. She is not 'giving it away'.

You say she is not giving it away, but you said originally 'signing it over'. How does that differ from 'giving it away'?

If - and obviously it's an 'if' - she ever needs care, she would rather the Government pay for it than use up her savings.

(a) She may never need care!

(b) The Government has no money. You mean taxpayers, of which I'm one.

I seriously doubt Mum would remarry, but obviously that would change things. Let's assume she won't, however.

Don't be too sure! Stranger things have happened.

A better use for savings may be to modernise, do home improvements, make the house more user-friendly, more convenient for someone in later life. A step-in shower rather than a bath, for instance. We have used savings for all these type of things over the past few years, whereas if we had 'signed over' our assets to anyone else, we shouldn't have been able to because the savings would then have been someone else's property.

EdInvestor · 7 December 2009 at 12:14PM

organdonor wrote: »

If she signed over her house and savings over to my brothers name and/or my name, would this prevent the Government getting their hands on her savings?

No

Is there any kind of time period where (for example) if she signed her house over 4 years ago and she needed care now, the Government could say the transfer of the house was too recent, and she'd still be forced to sell it?

There is no specific rule but you can be almost 100% certain they will claim deprivation of assets unless there is a very long time period since the transfer, stretching back to when Mum would have been quite young and spry.

The main problem with this idea is that it exposes Mum to the loss of her home as outlined in posts above.No doubt she is not up to date with the new laws affecting this area in recent years.Her solicitor will advise.It also exposes you to additional costs when she dies.The likelihood of Mum actually needing fulltime care is very low.She could probably afford to fund minor home based care herself through pensions and benefits.

Suggest you look into 'immediate needs annuities'.These plans pay for the care without using up all the value in the property and may be a halfway house that appeals if the worst comes to the worst.While one understands she wants to hand down assets to the family, I think it's worth pointing out that it's not up to the taxpayer to subsidise people's inheritances.The people whose care is being paid for are not after all passing on a property to their children,so it is not a comparable situation at all.

Signing over house, savings (etc.) to sons to stop the Government getting it

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