Signing house over to children before care

Mrs_pbradley936

Torry_Quine wrote:

Sorry but this is true, as I know from personal experience! A relative had signed her home over to us many years before and when she was assesed for council funding she was asked if she had owned the property, which solicitor had handled the signing over of the house and why she had signed it over.:

I think you are mistaken, most of us do have a solicitor and if there is a mortgage I think you have to but you can go it alone. In much the same way as probate, most of us would not have a clue so let a solicitor handle it, but you can do it yourself. The only reason I know is because I have two friends in similar circumstances – they have both just lost their only surviving parent (mother). Both elderly ladies had property and assets but one lived in Wales and comes below the Inheritance Tax threshold but the other lived on the borders of London/Essex so her house value takers her well over the threshold. The friend above the threshold is letting the solicitor do it all, the other one is doing it himself. I gather the first thing the authorities ask is an approximate value of assets and if it is below the threshold they pretty much let you sign a few forms, but if it is above you have to have valuations and it all gets a bit complicated. Plus I think the solicitors bill is settled from the Estate of the deceased.

margaretclare

woodside61 wrote:

I am planning the following

1. We are buying a house with no mortgage to live in
2 Putting the house in 5 names ie kids as well who are 12 to 8 yrs old
3. In 6 years time getting the oldest one to sell his portion of the house back to us and then loaning us the money we pay him for his portion which he can then claim back against the estate when we die and so on for each of the other 2 children when they hit 16 or the month beforehand to avoid issues of control etc

This way we can avoid a hefty portion of IHT in the future as well as safeguarding our house against spouses who marry into the family and then separate.

has anyone else thought of this or is it nonsense?

Well, I don't know about nonsense. It sounds incredibly complicated and - the word Byzantine springs to mind. I think there are a number of complications which could arise, the main one being - all the 5 beneficiaries (I assume that's yourself, OH, and 3 kids?) have got to agree on all these twists and turns. From what I know of families, all kinds of glitches can arise, disagreements, objections among the family members.

We (that was my first husband and me) had a 'gentleman's agreement' within the family - not to avoid IHT/care costs - but it gave preferential treatment to one part of the family provided they in turn gave a helping hand to another member. It didn't happen. Not all of the 'gentlemen' in the 'gentleman's agreement' behaved like gentlemen. It caused acrimony which resounds to this day.

Margaret

Torry_Quine

pbradley936 wrote:

I think you are mistaken, most of us do have a solicitor and if there is a mortgage I think you have to but you can go it alone. In much the same way as probate, most of us would not have a clue so let a solicitor handle it, but you can do it yourself. The only reason I know is because I have two friends in similar circumstances – they have both just lost their only surviving parent (mother). Both elderly ladies had property and assets but one lived in Wales and comes below the Inheritance Tax threshold but the other lived on the borders of London/Essex so her house value takers her well over the threshold. The friend above the threshold is letting the solicitor do it all, the other one is doing it himself. I gather the first thing the authorities ask is an approximate value of assets and if it is below the threshold they pretty much let you sign a few forms, but if it is above you have to have valuations and it all gets a bit complicated. Plus I think the solicitors bill is settled from the Estate of the deceased.

As previously stated the council asked my relative for details re transfer of her property and she is well below Inheritance Tax. She initially used her savings to pay for her care and then when they rapidly dropped she was assesed and questions about whether she had owned property were asked.

ossie

I often wonder if I took out an equity release mortgage (not recommended) and passed the proceeds on to the kids / had a damn good holiday. Who would then get first call on my assets the lender or the council. Could they demand the amount back from the equity release should I need to go into care.

Biggles

As previously stated the council asked my relative for details re transfer of her property and she is well below Inheritance Tax. She initially used her savings to pay for her care and then when they rapidly dropped she was assesed and questions about whether she had owned property were asked.

The council would only have been interested in whether there was deliberate 'deprivation of assets'. It would not have been any of their business whether a solicitor handled the transfer or not.

Mrs_pbradley936

Well my friend worked out that at £97 per day his mothers' assets would have kept her in the home for 16 years - she was there for 6 weeks.

See here:-

http://forums.moneysavingexpert.com/showthread.html?t=320225

margaretclare

ossie wrote:

I often wonder if I took out an equity release mortgage (not recommended) and passed the proceeds on to the kids / had a damn good holiday. Who would then get first call on my assets the lender or the council. Could they demand the amount back from the equity release should I need to go into care.

The equity release works like a mortgage, in fact it's called a 'lifetime mortgage' meaning you don't have to pay it off in your lifetime. If you borrowed 25% of the equity it would be the lender for the first 25% plus rolled-up interest, then the council would have a claim against the remaining 75%.

Equity release also reduces your estate for the purposes of IHT.

Margaret

Torry_Quine

Biggles wrote:

The council would only have been interested in whether there was deliberate 'deprivation of assets'. It would not have been any of their business whether a solicitor handled the transfer or not.

How will the council know if there is deliberate deprivation of assets until they ask for information? the house had been signed over many years before when the relative was in good health with no expectation of needing long term care.

Biggles

How will the council know if there is deliberate deprivation of assets until they ask for information? the house had been signed over many years before when the relative was in good health with no expectation of needing long term care.

Precisely my point. That's why they were asking.

Plato

woodside61 wrote:

I am planning the following

1. We are buying a house with no mortgage to live in
2 Putting the house in 5 names ie kids as well who are 12 to 8 yrs old
3. In 6 years time getting the oldest one to sell his portion of the house back to us and then loaning us the money we pay him for his portion which he can then claim back against the estate when we die and so on for each of the other 2 children when they hit 16 or the month beforehand to avoid issues of control etc

This way we can avoid a hefty portion of IHT in the future as well as safeguarding our house against spouses who marry into the family and then separate.

has anyone else thought of this or is it nonsense?

chris:beer:

The main problem with having the house owned by other people - in this case children - is that any of their creditors will have a claim on that asset. In the extreem case of that person going bancrupt the house could have to be sold.