Parent Transferring Ownership

milliemonster

Please forgive me if I have posted this in the wrong place.

My father owns his own home which is worth approx £200k, he will shortly be 70 yrs old.

He has just this week told me that he is looking towards transferring the ownership of the property to both myself, my sister and my brother (the 3 beneficiaries in his will) whilst he continues to live in the house until he dies. He wants to do this to avert having his house sold to pay for care should he need it in the future although I think this has to be done at least 7 years in advance? (may be wrong)

I have told him he needs to get some independent advice on this. My main concern is that my brother got into a lot of financial trouble 3 years ago, had his house repossessed and had a CCJ for something. He now rents but is desperate at some point to get back on the property ladder and I am worried that he may be able to raise a mortgage against my dads house once he has part ownership and if it all goes wrong again my dad could end up with no home.

I also have debts of my own that my father knows nothing about. I am overpaying everything like mad at the moment and will be debt free in about 18 months time but do have this worry that if something went drastically wrong and I or my brother were made bankrupt (I know this is unlikely to happen as we can afford our own home and bills just on one income out of me and my husband) again my dad could lose his home.

Can anyone give any advice on this?

BitterAndTwisted

Your father really does need independent advice. I can't think of a worse situation to be in than leaving myself totally at the hands of family. And what's wrong with paying for care and using one's own property to finance it? I think the 7-year rule thingy is to do with inheritance tax, not evading care-home fees. I've heard that a lot of local authorities take a very dim view of folk intentionally impoverishing themselves in that way.

milliemonster

BitterAndTwisted wrote: »

Your father really does need independent advice. I can't think of a worse situation to be in than leaving myself totally at the hands of family. And what's wrong with paying for care and using one's own property to finance it? I think the 7-year rule thingy is to do with inheritance tax, not evading care-home fees. I've heard that a lot of local authorities take a very dim view of folk intentionally impoverishing themselves in that way.

Why should my father be forced to sell the home he has worked hard all his life for to pay for care should he need it in the future? He and my mum never spent any of their money during their working lives, it all went on the house and to save for their retirement, well, my mum didn't get to retirement as she died from cancer last year so they have missed out massively, it really annoys me that people who save nothing all their lives and rent in effect get everything paid for in old age should they need it, my dad is not a rich man, he has a few thousand in savings to supplement his state pension and the home he and my mum worked hard for. It's their wish to leave it to their children, he doesn't see why the state should get it, if they had never bought house all those years ago then he wouldn't be expected to find the money to pay for nursing home care in the future anyway.

Besides, I would rather have my father live with me than see him in a nursing home anyway. (I am a qualified nurse)

I have asked for advice on how best my dad can protect himself if he went ahead with this, not for whether he should be made to give up his home to the state or not

BitterAndTwisted

As a health-care professional yourself you are obviously aware that the care we are discussing here is personal-care not health-care needing to be financed by the user themselves. I just don't see anything wrong with that but then I'm not a 70 year old sitting on an asset worth £200k.

And, speaking personally myself, I get quite cross with people who see nothing wrong with taking anything the State can provide (that's me, you and all the other tax-payers) trying to milk the system just so they can leave an inheritance for their adult children who, presumably, are perfectly capable of making the same choices their parents did and providing themselves with their own home.

milliemonster

Actually, the care I am discussing is health care and NOT personal care, I would not see my dad in a home just because he needed help with getting washed and dressed in a morning for goodness sake.

I have already bought my own home and did not need help from my parents to do this.

My father and my mother always worked and paid their taxes all their lives, so you think then if he would need help in the future he should have to give up his home?, 'milking the system' as you put it? so it's perfectly acceptable for someone else to spend their lives renting, maybe in and out of work living off benefits, blowing their money on material rubbish then when they need care in retirement it's all paid for for them?, I'm sorry, I call that milking the system.

BitterAndTwisted

You can describe "milking the system" in any way that pleases you: I didn't bring up people who live off State benefits and wasn't thinking of them when I posted, I was just considering your father's situation but I have a vague feeling that I was the only one in this thread doing so

laurel7172

I don't know anything about care home fees, but I have a feeling that there are anti-avoidance provisions in place to stop people handing over their house to their children in these circumstances (if it were that simple, everyone would give their house to their children the day before they went into care).

The seven year rule applies to inheritance tax, however, if your father continues to live in the property he retains a beneficial interest and the inheritance tax clock won't start to tick unless he also pays you and your siblings a market rent.

p00hsticks

If your father continues to live in the house wthout paying the three of you a market rent, then HMRC will regard him as having a 'beneficial interest' in the property and it will still be considered to form part of his estate for IHT purpses.

If he needs to go into a care home, his passing the property on to you could be regarded by the local autority as a 'deliberate deprivation of assets' and he will still be expected to contribute to his care as if he still owned the property.

And if and when you come to sell the property, then if the three of you are not living in the property then you will be liable to pay Capital Gains Tax on any increase in proce form the day it is transferred into your names.

So like BitterandTwisted says, you really need to get expert advice or you could end up paying more than if you;d just left things as they are.

One question - if your father is not prepared to contribute to the costs for his own (non-health) care, and his own children are not prepared to either care for him themselves or contribute to the costs for the state to do it, then why on earth should I as a taxpayer have to shoulder the whole burden of it ?

monkeys_bunny

You really need to go to a Solicitor.most of them will offer you a free initial appointment (with the hope you will use them to draw up the Transfer, Deed of Gift etc etc) this way you can have everything straight in your mind from a professional who will just give you facts and not their opinion.

good luck with it all

sp1987

If your fathers need for possibly going into a nursing home would be a primary health need, then he would be the responsibility of the NHS and not social services for care funding anyway. He would be assessed for continuing health care and if approved (dependant on the health needs displayed) would qualify for free (residential) nursing care. This would mean his house would not be taken into account as capital for paying fees, as there would be no means tested fees to pay. It is only if he does not have a primary health care need that his care is means tested by social services.

If he was just to need 'help' in a more ageing/deterioration way than a medically assisted way, is that assistance you could look into for him? A 90+ year old family friend of ours managed a completely independant life at home and only relied on shopping being delivered by friends and neighbours and an hour of care a day (I think this was for bathing?) alongside her daily meals on wheels arrival, bless her heart.

The silver savers (or surfers, I can never remember what it is called!) board could be of assistance here, simply because it is a commonly discussed area for them being of a more 'mature' age.

Contact the CAB/Age Concern for free advice on this if a solicitor is costs prohibitive initially (although my argument for this would be that £200 an hour is a small price to look to legally protect oneself from thousands of pounds a month in care home fees).

martindow

milliemonster wrote: »

Actually, the care I am discussing is health care and NOT personal care, I would not see my dad in a home just because he needed help with getting washed and dressed in a morning for goodness sake.

Won't health care (as opposed to personal care) be paid for anyway? If you or paid carers would be able to provide this care in his house there is no reason for him to leave his house at all.

In general I don't think that it is unreasonable for the equity in a house to be used for care expenses. People owning houses have no more worked hard than those who rent. Equity in houses is something that has happened due to house price inflation not personal effort.

Before I am shot down, I have decided to move in with my elderly father who has dementia with in addition carers coming in morning and evening. As my father has savings over the limit he pays for the carers - and why not if he can afford to do so?