Passing money on to the children

Legacy_userLegacy_user Forumite
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MoneySaving Newbie
My mother (62) would like to know if there is still any way of passing property on to her children for them to benefit in the future, rather than being forced to sell later in life to pay bills for care homes etc should that arise.
My mother has been ona low income of £3,000 pa for years as a single parent to us all and wants the most out of the only money she has which is tied up in her house.

Any advice?? :)
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Replies

  • As far as i can recall property transfer can be done via your local solicitors. Give them a call and see what they say.
  • SystemSystem Forumite
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    Something sounds very wrong with this suggestion.

    (1) Are you not talking about inheritance tax as opposed to capital gains tax?...in which the transfer is only exempt after 7 years
    (2) If you are talking about IHT - surely Gordon Brown will disallow the transfer unless the parent pays market rate rents for continuing to live in the house.
    (3) All rental payments will be subject to the child's marginal rate of income tax after expenses are deducted.
    (4) Capital gains could be a BIG problem after 8 years of "renting" the property to the parent.

    Surely the state also takes a dim view of such transfers to avoid having to pay for elderly care - there's a legal term for such a situation - and they will simply treat the elderly person as still owning teh property when they apportion the care bills...although this may be dependent on how recently the parent "disposed" of the property prior to needing to be put into care.

    The whole issue is a minefield...and one that requires an expert opinion.

    RM
  • SystemSystem Forumite
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    In theory if you give money or property away with the intention to avoid paying care fees the value of any gifts will still be treated as your own and the gift can be recovered to pay for care fees. The 'legal' term is called DEPRIVATION OF ASSETS.

    In practice, provide that your admittance to residential or nursing home is not reasonably imminent then the Council would not seek to recover any gifts.

    And if your current medical condition is such that you cannot anticipate requiring care in the future then, I guess, if you gave away your home today but suffered a stroke tomorrow then the gift could not be recovered.

    I think the rules are more based on any intent to avoid paying care fees when you clearly need care than on any time limit after the gift is made, providing at the time you make the gift you have no reasonable prospect of requiring care.

    I think you will find that Age Concern or Help the Aged have leaflets on this.
  • Robert_Sterling_3Robert_Sterling_3 Forumite
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    My solution.

    Your mother's children look after her in her own home for the rest of her life.
    You will get some help from the local authority if it is needed.
    Then she can will the house to her children and the first £263,000 will be free of inheritance tax.

    IF people who are not members of her family have to look after her at some stage then it is perhaps right that the cost of the care should be paid for from her assets.
    ...............................I have put my clock back....... Kcolc ym
  • margaretclaremargaretclare Forumite
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    Hi Robert

    You say ' let her children look after her in her own home for the rest of her life.'

    But she's only 62 - no age in today's terms, probably fit, active and healthy. I'm 69. At 62 I met my 2nd husband, and we got married when I was 66.

    I would not give a very polite response if anyone suggested 'looking after me in my own home for the rest of my life' - especially if I thought their motive was to ensure a healthy inheritance for themselves.

    I cannot really see the objection to whatever one possesses, house property or other, being used to pay for long-term care should one sadly require it. But I admit that a lot of people are against this in principle.

    It must be remembered that it is still only a minority of people who will require long-term residential care. They are the cases we tend to hear about, but the vast majority of older people are sitll managing to live independently in their own home, even in 'sheltered accommodation', or even if they need some help like cleaning, meals, gardening etc.

    Margaret
    [FONT=Times New Roman, serif]Æ[/FONT]r ic wisdom funde, [FONT=Times New Roman, serif]æ[/FONT]r wear[FONT=Times New Roman, serif]ð[/FONT] ic eald.
    Before I found wisdom, I became old.
  • Robert_Sterling_3Robert_Sterling_3 Forumite
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    Hi Margaretclare.

    I think we share a lot of common ground on this one.
    I ought to have phrased my suggestion a little differently.

    e.g. Stay in your own home as long as possible with the aid of your children if appropriate and the local authority if necessary in due course.
    Your house may increase further in value. Mine has gone up 50% or more since year 2000.
    ...............................I have put my clock back....... Kcolc ym
  • margaretclaremargaretclare Forumite
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    Hi Robert

    Thanks for your reply clarifying. I may be getting a little over-sensitive about this, but I've noticed that whenever this type of question is raised it seems that the younger generation have avarice in mind rather than the well-being of their parent.

    We've already tapped into the equity on this 2-bed bungalow, to pay off the mortgage, because we didn't fancy going on paying a mortgage until we were 83. We borrowed 25% of the value, which was £140K. As I bought this in 1990 for £58K, like yours it has increased in value.

    We've also done quite a lot of work on making this little place more comfortable, more labour-saving, new kitchen, new bathroom with step-in shower, landscaped easy-care garden, all with a view to the future.

    Margaret
    [FONT=Times New Roman, serif]Æ[/FONT]r ic wisdom funde, [FONT=Times New Roman, serif]æ[/FONT]r wear[FONT=Times New Roman, serif]ð[/FONT] ic eald.
    Before I found wisdom, I became old.
  • Robert_Sterling_3Robert_Sterling_3 Forumite
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    I think we are in agreement on this matter.
    ...............................I have put my clock back....... Kcolc ym
  • margaretclaremargaretclare Forumite
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    Hi Robert

    Thanks for your reply.

    In response to the original poster, I would suggest that a 62-year old lady should be thinking more in terms of her own future comfort and convenience rather than of worrying about passing money on to the children.

    If she has any spare resources, it might be a good idea to do as we've done - a more modern kitchen, energy-efficient appliances, a more convenient bathroom etc. In 10 - 15 years (a) she might have less to spare and (b) need things replaced and modernised when she feels less motivated to do it. I've seen this happen numerous times.

    We tend to do something each year - this year it was a new 'A' rated washing-machine to match the 'A' rated fridge-freezer that we bought last year. We've also had garden landscaping done 2 successive years. The new kitchen and bathroom were about 5 years ago now, while we were both still working (we worked up to age 67).

    Margaret
    [FONT=Times New Roman, serif]Æ[/FONT]r ic wisdom funde, [FONT=Times New Roman, serif]æ[/FONT]r wear[FONT=Times New Roman, serif]ð[/FONT] ic eald.
    Before I found wisdom, I became old.
  • oxteroxter Forumite
    173 Posts
    If mum has to go into care, what's to stop her renting her property out and using that income to pay for care, topped up if necessary from savings, pension, family etc.?  Alternatively, give to family now, survive 7 years, and family pay care home bill in due course.

    Anything illegal,unethical,improper about that?

    Suggestions on a postcard to Gordon Brown MP
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