Will and my home

Chucksmum

We're 60 with a 21 year old. The solicitor has totally confused us, we want to make sure our house is left to our child and not sold for home fees (God forbid). Our solicitor made so many suggestions we were totally bemused when we came out. Can anyone shed any light to help us make up our mind about what should be done - please!!

dunstonh

If your solicitor recommends it, then you should do it. The principle of what is being recommended is sound and whilst future legislation may change it, so far the courts have ruled against the three local authorities that have challenged this style of trust.

Your solicitor will explain things you dont understand and no-one would expect you to fully understand on a single meeting.

EdInvestor

First of all, only 4% of people over 65 go into long term care, it's an extremely small minority and they are almost all over 80*.Secondly, if one person goes into care, the house is not touched while the spouse is still living in it.So you do not need to worry about this AT ALL until one of you dies.

However, what you should do is alter the way that you jointly own your assets, so that half is in each name - this includes the house, which should be owned as "tenants in common" in both names.The solicitor can help with this.

Have a bank account each and split up any other assets into both names as well.I say this because there have been cases where the council has taken jointly owned savings to pay for one person's care, leaving the person still at home with no money.This rule is now changing, but just to be sure, it's sensible to make it all half each and then they can't touch the other person's money.

*And while we're on the subject, only 5% of those over 60 get Alzheimers/dementia and only 6% of estates pay inheritance tax.

So much of this worrying is really quite unnecessary.:)

dunstonh

Whilst the stats are low, the transaction being recommended by the solicitor is common sense. It also has benefits to inheritance tax and whilst Ed remarks that estates historically liable to IHT have been low, you only have to look at the average property values now to realise that in some areas, everybody is going to have an IHT liability.

EdInvestor

you only have to look at the average property values now to realise that in some areas, everybody is going to have an IHT liability.

Again this can be overblown.There is no IHT between spouses, and the IHT "personal allowance" (nil rate band) is 285,000 per person.The average house price in the UK hasn't reached 200k yet. [Oh and BTW, pensions do not fall into your estate when you die - so you don't have to count them in your assets for IHT.I suspect some people might be confused about that.]

Unsurprisingly the majority of people paying IHT are widows who live in London.There's certainly no harm in looking into reducing it if you're in that bracket, but the vast majority of people aren't and don;t need to worry about it.

dunstonh

Oh and BTW, pensions do not fall into your estate when you die - so you don't have to count them in your assets for IHT.I suspect some people might be confused about that.]

They have to be considered with estate planning because they become payable on death and therefore are included on the estate on second death. Second death is when most estates suffer.

The proposal of the solicitor would utilise the nil rate band on first death ensuring that a greater amount escapes IHT.

A solicitor is unlikely to recommend this course of action to someone not needing it. If the estate on second death is greater than £285,000 then there is good reason to do it. It doesnt cost much and gets round a number of potential issues which may or may not happen.

Tiggs_2

EdInvestor wrote:

.The average house price in the UK hasn't reached 200k yet.
Unsurprisingly the majority of people paying IHT are widows who live in London.

Sounds like Labour spin!

My firm does NOTHING but IHT planning. Average house price in our town is over £400k and IHT seminars are packed......and we arent in London!

Most half decent places in the South are affected in a big way.

cheerfulcat

EdInvestor wrote:

Again this can be overblown.There is no IHT between spouses, and the IHT "personal allowance" (nil rate band) is 285,000 per person.The average house price in the UK hasn't reached 200k yet.

The average UK house price is not far short of £200,000. The estates of most people who live in detached houses ( and who have lived for long enough to amass a few nice things ) will be caught by IHT sooner or later.

Chucksmum, I suggest that you ask the solicitor to go over the options again and explain them until you do understand. Alternatively, write them down and people here might be able to point you in the right direction. I think that you do need to sort this out; don't let Ed's soothing words mislead you.

EdInvestor

I note the OP is concerned about care home fees, not inheritance tax.

Useful info about care home fees

The average UK house price is not far short of £200,000. The estates of most people who live in detached houses ( and who have lived for long enough to amass a few nice things ) will be caught by IHT sooner or later.

Note that the total band nil rate band for a couple will be 600k next year.

I don't really see the problem here.Would it not be more sensible for the matter to be left open so that the widow(er) inherits the home IHT free? S/he can then downsize to a smaller and more maneable home which will not attract IHT, also releasing capital for spending and giving away to children while the person is is still alive.

There are tax free allowances to do this, and one can think of many middle-aged couples who would be delighted to receive part of their inheritance now to help pay for kids' property deposits, school and university fees etc.

Why lock the money up in the home?

Wives should be very cautious here that they don't get locked into something they can't get out of later , if their husband dies first (as usually happens). Usually,their income will then halve as 50% spouse pensions are the norm. Thus they may well want to downsize to a smaller home, both for convenience and to raise capital for investment to increase their income.

Chucksmum

I didn't express myself at all well in my original post. My problem is, my son suffers from an illness similar to agoraphobia. What we want to do is make provision now so that if we have to go into a home in the future, the family home is still there for our son to live in. IHT won't worry us unless Ernie is kind to us!

EdInvestor

Does your son with live with you?