Dont want to loose a property i own to pay for care home.

Baz_2

noh wrote: »

Yes but we don't know what the land registry entry states in this particular case.
Perhaps the OP can tell us?

Its one and the same, the deeds and the land registry entry is the same nowadays. His nan will be the owner/proprieter per the land registry but the trust (which will also be mentioned in the deeds) legally over rides that, saying he is the legal owner.

That's what the trust is all about.

I did a case a few months back for a client that had him as the proprietor but all his brothers and sisters as the legal owners. He had no legal right to the property at all, but would be the name you would see as the owner should you do a search at the land registry.

The solicitor that set that up for them had no idea about tax implications either. Nearly gave him a heart attack when I said there was (in that case, not this one) a potential change in owner due to the trust etc. Solicitor was worse than useless to be honest.

That's why I said an accountant would be best.

noh

As you say the land registry entry is what matters.
My point is that it is not clear from the original post whether or not the land registry entry correctly reflects the arrangements made.

"but we left the deeds in her name so i could "Inherit" the property"

is the phrase which makes me doubt that they do.

Baz_2

noh wrote: »

As you say the land registry entry is what matters.
My point is that it is not clear from the original post whether or not the land registry entry correctly reflects the arrangements made.

"but we left the deeds in her name so i could "Inherit" the property"

is the phrase which makes me doubt that they do.

"we had a deed of trust made to protect us both which read "all finance to purchase this property has been paid for by my grandson .... he owns the property.

Is the phrase that makes me quite certain they do.

If the solicitor is worth his salt the actual property deeds will have that sentence in there too.

And no, the land registry entry is not what matters, its the deed of trust that matters. The deed of trust is the legal document that will take precedence over the registry entry.

localhero

Land law is a little tricky to comprehend, but in short there is the legal title that the Land Registry records. There are also 'equitable or beneficial interests' that the Land Registry has no interest in - ie where there is a trust.

Therefore if the Deed was executed properly, then the OP will be the beneficial owner rather than the nan. This is what will determine whether the property is to be included in the means assessment for long term care.

I rather suspect that to cover all bases, the legal title to the property was left in the Will to the OP, to leave no doubt that one way or another the property will revert to the OP when nan dies.

The morals of the arrangements of the OP should be set aside. It is slightly disappointing, but not surprising that the solicitor who charged a fee for preparing the Deed was unable to advise upon the consequences or the tax position for the parties.

If I were the OP, I would see whether the local authority challenge the arrangements, and if they do then further professional advice should be sought from a STEP practitioner - ie somebody qualified in the legal and taxation position.

chopperharris

So the guy seen a way to a huge profit , and no not a quick buck , now finds out the hard way that he could well be shafted.

The rtb was and is for the long term renter to get on the ladder , not for someone in their family to prosper that didnt even live there ...even if it was their own capital.

You could well end up a legal case to prove precedent , but I am sure that will already be set.Given the state of this "dodge" happening if I was council legal and shown deprived of income for health care budget then I would let loose the hounds.Each of the both sides imo are just as bad.

You are heading in a very dark direction , a family member had the same problem.She got around it by legal letters from the sons and daughters stating no inheritance would come to them from the house as it was bought for their mum to live in rent free until death...fortunately for one of the children at least she died before long term care was proven to be needed and the time limit had run out.

One of the posters is right though the council property if not bought by the renter should have went back in to stock for someone else.If the renter had bought it then it would have been inheritance to the children and not simply profit for a grandson from council coffers and at the expense of those needing a council roof.

Side note.The councils never got any rtb money , that always went to HMG , nor did they have to replace the sold stock.This was to promote an economy based on home ownership through reduced council stock.So HMG are just as bad as the OP and benefitted from it too as opposed to the council and those needing council property whom lost because of it.

You may find that some family members might see some windfall coming to them if these deeds of trust are as shaky as it sounds.

Option 1

sell the house look after nan in your house aided through council home care (oh the irony), have the money legally gifted and run out the time limit.

Option 2

Nan sells you the house for a quid , run out time limit while looking after her.Im sure if sellling in the short term afterwards your going to be whacked on cgt so lease it instead.

IF you never bought the house it would have been a lot simpler her just going into sheltered housing...swapping one council property for another.

Baz_2

jimmo wrote: »

Excellent post from Local hero (at #66). Well it makes sense to me anyway.


I would be looking at potential Capital Gains when OP sells the flat.
For what its worth, my starting point would be that OP actually bought the flat from the council and when he sells it he will be liable to Capital Gains Tax on the gain he will realise.
In other words the fact that the OP provided the funds for the purchase and will be entitled to the proceeds of sale are strong pointers that he has been the Beneficial Owner throughout.
That could be totally correct or it could be absolute rubbish but from the HMRC side of the coin it’s a starting point.
If that proves to be correct then there can be no question of nan ever having beneficial ownership and no question of deprivation of assets or using the value of the flat to pay for nan’s care.
I think the real problem is that as the flat was bought in nan’s name then social services will take that as their starting point.
Anything that the OP argues to convince social services that the flat was never really in nan’s beneficial ownership will seriously weaken any arguments he wants to present to HMRC against him being the beneficial owner.

So if he doesn't sell it, which he has never indicated he wants to, you wouldn't have any reason to look into it at all. So scaremongering again then?

I don't think anyone disputes the fact he will have to pay CGT when he sells it. As for the social services, he will be well outside of any time limit they impose on being able to claw the house back into any means testing re care costs.

As for chopperharris post, yet more scaremongering. Barely understandable to be honest.

sloughflint

Baz wrote: »

As for the social services, he will be well outside of any time limit they impose on being able to claw the house back into any means testing re care costs.

Several posters on this thread have stated that there are no time limits.

localhero wrote: »

If I were the OP, I would see whether the local authority challenge the arrangements, and if they do then further professional advice should be sought from a STEP practitioner - ie somebody qualified in the legal and taxation position.

The above seems to be the best suggestion of thread.

BTW,I found this link interesting regarding deprivation of assets,timings and motivation:

http://www.taxationweb.co.uk/tax-articles/tax-efficient-investments/potential-tax-and-financial-pitfalls-in-transferring-the-family-home-to-avoid-long-term-care-costs.html

Baz_2

sloughflint wrote: »

Several posters on this thread have stated that there are no time limits.


The above seems to be the best suggestion of thread.

BTW,I found this link interesting regarding deprivation of assets,timings and motivation:

http://www.taxationweb.co.uk/tax-articles/tax-efficient-investments/potential-tax-and-financial-pitfalls-in-transferring-the-family-home-to-avoid-long-term-care-costs.html

9 years ago is long enough to prove that the motivation was not to avoid care costs.

In any event, she never owned it, either legally, or in substance to be able to gift it anyway.

If they are to take the asset into account then surely they would also have to take the corresponding liability into account too, i.e the fact she owes her grandson the money for buying the house in the first place.

There are cases when this sort of thing is problematic but really this one is open and shut.

Furthermore than Gifts with reservation point that article makes is a bit of a red herring as you can opt of of it and go back to the 7 IHT rule, it is also fairly new legislation that was not in force when the original transaction came into effect. I guess the "advice" you would get is to opt out of it.

siemli

So after reading all of that let me answer a few questions.
Nans 3 daughters have always looked after as have i, they were offered the opp to buy the flat but none of them could invest.
I took that opp although i struggled to pay the loan at the time i knew one day it would be worth while.
Yes i saw an investment sometime long long in the future but can you blame me, a little nest egg for my family, nans grandchild and great grand children.
But one thing is evident, the solicitor was happy to take my money but never advised anything about what all of you have said.
I was advised this was the best option so was guided by him.
Still im still in limbo, and it seems dammed if i do and dammed f i dont..
Thanks everyone with the constructive comments....