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    • thor
    • By thor 9th Jul 17, 9:00 AM
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    thor
    Parents gifting to children?
    • #1
    • 9th Jul 17, 9:00 AM
    Parents gifting to children? 9th Jul 17 at 9:00 AM
    I believe that if you give away your house to a relative and you end up in care then the authorities have the right to take the house off them. Is that correct? If so is it true for all ages? e.g. A parent in their 40s transferring ownership to a 20 something child?
    My mother(owns outright) wants to gift the house we both live in to me. She is in her 70s and in good health. I have told her to get a will written up(which she should have done anyway) and let me inherit it instead. I do have siblings but they would be fine about that. Is this the best course of action?
Page 1
    • AnotherJoe
    • By AnotherJoe 9th Jul 17, 9:15 AM
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    AnotherJoe
    • #2
    • 9th Jul 17, 9:15 AM
    • #2
    • 9th Jul 17, 9:15 AM
    Best course of action in what respect ?
    It might be if you became joint owners and were in your 60,s when the time came for her to move into care that all of the house or maybe half would be protected.
    OTOH your mother would lose the ability to chose which home to go to.
    Do you own any other properties?
    • da_rule
    • By da_rule 9th Jul 17, 9:24 AM
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    da_rule
    • #3
    • 9th Jul 17, 9:24 AM
    • #3
    • 9th Jul 17, 9:24 AM
    It's only a problem if it is done purely to avoid care home fees. So, if at the moment there is no foreseeable likelihood that your mother would need care then you should be fine.

    Something that does also need to be considered though is a gift with reservation of benefit. Basically if your mum retains the benefit after making the gift (i.e. she continues to live in the house rent free) then she hasn't really made you a gift and it will still form part of her estate.

    If the gift is made properly during her lifetime and she lives for a further 7 years after making it then it will not be chargeable to inheritance tax, which is a bonus.

    A better solution may be to transfer 50% of the equity to you now. That way only half of the value of the house would be assessed for care home fees (if needed). Also, only 50% would be chargeable to inheritance tax if applicable. Also, depending on how you hold the property together it could pass directly to you on death outside of the will.
    • martindow
    • By martindow 9th Jul 17, 11:26 AM
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    martindow
    • #4
    • 9th Jul 17, 11:26 AM
    • #4
    • 9th Jul 17, 11:26 AM
    Another issue can arise if there is more than one child in the family. It can lead to a lot of ill feeling if one child seems to be favoured over others.
    • 00ec25
    • By 00ec25 9th Jul 17, 2:20 PM
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    00ec25
    • #5
    • 9th Jul 17, 2:20 PM
    • #5
    • 9th Jul 17, 2:20 PM
    whilst your question is about evading care home fees, do take note of the inheritance tax issue. Your mother cannot avoid that if she continues to live in the property since that is precisely what Gift With Reservation (of benefit) usually referred to as GWR, addresses

    the 7 year rule only applies if she stops living there after making the gift, if not then it remains a GWR

    as for the deprivation of assets rule there is no absolute rule that anyone can quote. At the end of the day wit comes down to the attitude of the council when faced with your mother's claim for care home costs as to how hard they decide to investigate her financial dealings. At age 70 making a gift of the house she still lives in is patently done for only 2 reasons: avoid care home fees or avoid inheritance tax. The first cannot be guaranteed, the second is certain she won't.
    • AnotherJoe
    • By AnotherJoe 9th Jul 17, 3:02 PM
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    AnotherJoe
    • #6
    • 9th Jul 17, 3:02 PM
    • #6
    • 9th Jul 17, 3:02 PM
    My understanding may be wrong, but i thought that if one of the remaining owners in residence was over 60 the house cannot be forcibly sold?
    • thor
    • By thor 11th Jul 17, 3:17 AM
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    thor
    • #7
    • 11th Jul 17, 3:17 AM
    • #7
    • 11th Jul 17, 3:17 AM
    At age 70 making a gift of the house she still lives in is patently done for only 2 reasons: avoid care home fees or avoid inheritance tax. The first cannot be guaranteed, the second is certain she won't.
    Originally posted by 00ec25
    In light of all the replies I think it would be best sticking with my original plan and telling my mother to write in her will that I inherit the house. Her estate will fall well under the inheritance tax threshold and my siblings will have no problems about me getting the house. In the meantime if she does need to go into a care home and the council want to use the value of the house to pay for it then so be it but sending her there would be a last resort as I would want to look after myself for as long as possible anyway.
    Thanks for all the interest guys.
    • getmore4less
    • By getmore4less 11th Jul 17, 6:40 AM
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    getmore4less
    • #8
    • 11th Jul 17, 6:40 AM
    • #8
    • 11th Jul 17, 6:40 AM
    As you are living in the place and if remain living in the property you can get gifted a portion of it without gift with reservation issues(or the other catch preowned asset).

    IF her finances are relatively simple and IHT is not an issue then sharing te house as joint tenants could simplify administration of her estate when the time comes.

    There is the other issue that you must not rule out that you could pass first so you need to have plans for that as well and consider your own IHT position.
    • 00ec25
    • By 00ec25 11th Jul 17, 9:55 AM
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    00ec25
    • #9
    • 11th Jul 17, 9:55 AM
    • #9
    • 11th Jul 17, 9:55 AM
    As you are living in the place and if remain living in the property you can get gifted a portion of it without gift with reservation issues(or the other catch preowned asset)..
    Originally posted by getmore4less
    why do you say that?

    mother will continue to live in the property and that is precisely what GWR is designed to catch. It does not matter for IHT purposes if the child lives or does not live in the property they now own by virtue of the gift, what matters is does the gifting parent.

    Also, as you've mentioned it, POAT is expressly designed to close off whatever GWR misses. I think you are wrong
    • getmore4less
    • By getmore4less 11th Jul 17, 10:35 AM
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    getmore4less
    why do you say that?

    mother will continue to live in the property and that is precisely what GWR is designed to catch. It does not matter for IHT purposes if the child lives or does not live in the property they now own by virtue of the gift, what matters is does the gifting parent.

    Also, as you've mentioned it, POAT is expressly designed to close off whatever GWR misses. I think you are wrong
    Originally posted by 00ec25
    Not if the person receiving the gift also lives there the doner has given up the beneficial interest in part of the property typically for 2 people that share the property equally that would be 1/2 and that becomes a PET

    GWR would not apply to that 1/2 as the donee has bona fide possession and enjoyment of the property(they live there) and needs to for 7 years for the PET not to fail.
    • Mojisola
    • By Mojisola 11th Jul 17, 10:51 AM
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    Mojisola
    My understanding may be wrong, but i thought that if one of the remaining owners in residence was over 60 the house cannot be forcibly sold?
    Originally posted by AnotherJoe
    More than that - none of the value of the house would be counted during the financial assessment. The resident over-60 relative doesn't have to be an owner.

    http://www.ageuk.org.uk/home-and-care/care-homes/the-means-test-and-your-property/
    Your home also wonít be counted if itís still occupied by:
    your partner or former partner, unless they are estranged from you
    your estranged or divorced partner IF they are also a lone parent
    a relative who is aged 60 or over
    a child of yours aged under 18
    a relative who is disabled.
    • Mojisola
    • By Mojisola 11th Jul 17, 10:56 AM
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    Mojisola
    My mother(owns outright) wants to gift the house we both live in to me. She is in her 70s and in good health.

    I have told her to get a will written up (which she should have done anyway) and let me inherit it instead.

    I do have siblings but they would be fine about that.
    Originally posted by thor
    Never underestimate how feelings can change!

    It would make things more straightforward if you became an owner or part-owner while she is alive.

    Have you thought about the 'what ifs'? Will your mother be happy if you get a partner who moves in? What if you get a new job and need to move to a different area of the country?
    • Keep pedalling
    • By Keep pedalling 11th Jul 17, 11:07 AM
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    Keep pedalling
    In general it is a bad move to give away your major assets as you never know what the future holds. If the OP died before their mother or got into financial difficulties, she could find herself in a difficult situation.

    Make sure that you also get your will sorted out, and putting lasting powers of attorney in place is also a wise thing to do.
    • xylophone
    • By xylophone 11th Jul 17, 12:04 PM
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    xylophone
    https://www.moneywise.co.uk/work-family/pay-less-tax/can-i-gift-half-my-house-to-my-child-to-cut-inheritance-tax

    You live in the house and pay at least your share of all expenses that relate to it and have done so and will do so for the foreseeable future?

    Your parent's purpose in making the gift is to acknowledge the contribution you make to the property and its maintenance?


    If the property were registered as joint tenants/tenants in common, your mother would be regarded for IHT purposes as making you a gift of half the value of the property - if you moved out at some point in the future and made you PPR elsewhere, your half would be subject to CGT rules on sale.

    As you are actually living in the house and paying your way, it seems to me that there would be less chance of a question of DoA arising should your parent need to go into care at some point.

    http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS38_Property_and_paying_for_residential_care_fcs. pdf?dtrk=true

    http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS40_Deprivation_of_assets_in_social_care_fcs.pdf? dtrk=true

    Of course, you could choose to mortgage the property if your mother went into care and "buy her out" of her interest in the property.

    If the property were owned as joint tenants, the property would pass to the joint owner on death outside any will - if owned as tenants-in-common, the interest could be willed to the other party or any other person the testator chose.

    There are other considerations - you are young and may marry - you might prefer not to move your wife into the property/your spouse might prefer not to move into the property - this would land you with the expenses relating to maintaining a second property.

    If you divorced/had financial misfortunes etc, the security of your mother in her home could be put at risk.

    There is a lot to consider.....
    • Mojisola
    • By Mojisola 11th Jul 17, 12:20 PM
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    Mojisola
    There are other considerations - you are young and may marry - you might prefer not to move your wife into the property/your spouse might prefer not to move into the property - this would land you with the expenses relating to maintaining a second property.

    If you divorced/had financial misfortunes etc, the security of your mother in her home could be put at risk.
    Originally posted by xylophone
    Mum is only in her 70s - she might meet someone and get married.

    That would change the dynamics in the household.
    • xylophone
    • By xylophone 11th Jul 17, 12:46 PM
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    xylophone
    Mum is only in her 70s - she might meet someone and get married.
    Perfectly possible - I was buying a wedding anniversary card a day or two back and the sales assistant mentioned that some visitors to the city had dropped into the shop and mentioned in passing that they were celebrating their first wedding anniversary - aged late eighties/early nineties.
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