Tennants in Common 10/90% split

Tryingtodotherightthing

My mother has been advised to put her house in hers, my sisters and my names, 10% to her and 45% each to me and my sister. This is as tennants in common. The property is held in trust in her will and it is the way the will is written. If we should predecease her there is a conditional declaration reverting the ownership back to her. The idea is that if she retains 10% she does not have to pay rent to us; if she should need social care then her share would not be touched as it is not worth anything; therefore avoiding self funding. The company offers probate services and describes itself as 'a national independent legal services organisation' I dont think the adviser is a solicitor but has many years experience of this.
Apparently there are many company's that do this and lots of people my sis and mum know have done it.
I have reservations about this, does anyone have any experience/knowledge of this? I would really welcome some help. (constructive comments only please, no personal views on the rights and wrongs of this!!!)

dzug1

No comment on the care side of things, but how do you propose to avoid CGT when the house is sold and IHT if the estate is large enough? Has the company covered these angles? Like you I am suspicious as to whether it's legitimate

It's tenant BTW - Tennant is a brewery - and an actor

McKneff

Tryingtodotherightthing wrote: »

My mother has been advised to put her house in hers, my sisters and my names, 10% to her and 45% each to me and my sister. This is as tennants in common. The property is held in trust in her will and it is the way the will is written. If we should predecease her there is a conditional declaration reverting the ownership back to her. The idea is that if she retains 10% she does not have to pay rent to us; if she should need social care then her share would not be touched as it is not worth anything; therefore avoiding self funding. The company offers probate services and describes itself as 'a national independent legal services organisation' I dont think the adviser is a solicitor but has many years experience of this.
Apparently there are many company's that do this and lots of people my sis and mum know have done it.
I have reservations about this, does anyone have any experience/knowledge of this? I would really welcome some help. (constructive comments only please, no personal views on the rights and wrongs of this!!!)

You can't come on a public forum and dictate what people post.

People do have views and you will have to take the rough with the smooth.

Perhaps you could google 'deprivation of assets' to start with.

getmore4less

The company will take their fees.

When it all goes wrong you won't be able to get the fees back.

Also looks like they may want to be executors.

Any declaraion of transfer back to mum is probaly easly undone, so could get messy.

to secure the residency would require a preedeath trust, whio is going to manage that.

Once done then there is only 10% that needs to be in mums will.

You should all take independant legal advice from experts in estates, benifits, trusts, deprivation of assets, etc not easy to find someone that does all the things needed.

pollypenny

OP, are your reservations about the scheme on its effectiveness or its morality?

Tryingtodotherightthing

Dzug1 - thanks, He said that to avoid CGT you put yourself on the electoral register for 6 months after she has died. IHT, the estate will not exceed the allowance as Dad died recently and therefore have his to take into account too. My solicitor has advised against doing this but my mum and sister think it is a good idea. I am stuck as to what to do!
ps - your final comment made me laugh out loud! you can tell i am not used to such things!

Pollypenny (what is OP?) My reservations are about the scheme's effectiveness.
THanks.

McKneff

OP is original post or original poster.

To be honest, i think the solicitor will have far more knowledge about this than your mother and sister, (all due respect to them)

margaretclare

Tryingtodotherightthing wrote: »

Dzug1 - thanks, He said that to avoid CGT you put yourself on the electoral register for 6 months after she has died. IHT, the estate will not exceed the allowance as Dad died recently and therefore have his to take into account too. My solicitor has advised against doing this but my mum and sister think it is a good idea. I am stuck as to what to do!
ps - your final comment made me laugh out loud! you can tell i am not used to such things!

Pollypenny (what is OP?) My reservations are about the scheme's effectiveness.
THanks.

OP - original poster.

I would want to know (1) on what grounds does the solicitor advise against this - his/her reasoning and (2) on what grounds do mum and sister think it's a good idea? Presumably mum and sister are less legally-qualified and legally-experienced than is the solicitor?

You say 'mother has been advised to...' by whom, and what are their qualifications for making such advice? It is possible that whoever advises this has an 'axe to grind', to use an old-fashioned phrase, and the person/people advising this may NOT have mum's best interests at heart but are looking to make a fast buck.

Your mum and sister know 'lots of people' who have done this. I would want to know a great deal more before making a decision like this, and asking the 'lots of people' might be a good place to start.

It is also worth remembering that only a minority of people end up in long-term residential care which has to be paid for by somebody. The vast majority of older folk manage to live in their own homes, even with paid help coming in.

'The scheme's effectiveness' - well, that all depends on what you expect it to achieve. It ain't going to come free, you can take that as read. These people are not in it for the good of their health, nor of yours or your mum's health either!

JuneBow

To the OP, I would have grave reservations about the adviceyou have received so far from this "advisor"

1. if this advisor has advised you to make anytransfer of the home “to avoid care home charges” the transaction is ignoredfor means tested benefits. This iscalled deprivation of assets and is actually benefit fraud. It is clear from your post that your mumwants to make the transfer to claim means tested benefits. She is not making the gift to you foranything else. This will be on the filenotes of the advisor and the LA can request these file notes if they areconcerned about the gift. There is nolimit to the time that they can go back if they think that the reason of thetransfer is to avoid means testing. Ifthere is ANYTHING on the advisor’s file notes to indicate the reason for thetransfer, then the transaction is ignored. He should not have told you to do this.

2. The transfer is ineffective for IHT as your mumis still living there.

3. If the transfer is into a trust there will be noCGT as PPR exemption is available within a trust. If there is no trust, when the house is soldthere will be a CGT liability. The partthat mum owns will be covered by PPR, the part that you and your sister ownwill not qualify for PPR. It is nonsensethat “you only need to move into the house for six months to avoid CGT”. HMRC will look at the quality of the “residence“ not the quantity. If you post this questionon tax, there is someone called Jimmo who used to work for HMRC who will tellyou that this is nonsense. So youradvisor seems to be saying “put it into trust but move in there for six months” Why would you need to do this if there is noCGT to pay anyway if the property is in trust.

4. There is a common misconception that jointlyheld assets are valued at nil for LA funding. There are two cases on this. Oneof the cases the jointly held property was held by the joint owner who did notneed the care (they were the child of the person needing care) The other case, the jointly held property washeld by the daughter who did not live there when her parent needed care. The value of this was not nil.

I am not surprised the solicitor has advised you not to dothis. Go to a solicitor who is a memberof STEP.

There are various unregulated firms who offer this type ofadvice/service. They rely on urban mythslike “if you give the property away and aftersix months and you are not caughtby deprivation of assets” “you need to move in for six months” etc etc. They charge large amounts offees.

They also want to be executor and charge large sums. So do solicitors, but you can say no to bothof these.

Please pay for proper legal advice. If it all goes wrong you can sue.