Morbid CC question !

lisyloo

But really, that could never happen. I have a strong family and have never and would never fall out with anyone.

Let's suppose your son falls on hard times - sickness, divorce, redundancy or even death.
I can assure you that your strong relationship will count for nothing if someone else has a legal claim on your property.
The businesses that would repossess wouldn't care that it was your home and neither would a divorced woman.

Another implication not already metioned is long term care.
You don't sound old but if you needed long term care (or any other state benefit) then the local authority will look very closely at this transaction and they have the power to undo it (no time limit).
They could see this as "delberate deprivation of assets" (proper term) to obtain state benefits.

Was my theory right about the card being wiped though?

Only if you have NO other assets.
So (for example) if you die before retirement and you have any pension funds then it is quite likely that they would pay out a lump sum (equivalent to your pension fund) to the estate.
So only if you have no pensions, no life assurance, no car, no house, no jewelry etc.

As others have said you need to be very careful to consider the implications (losing your home) simply to get "something for nothing".

Paul_Herring

What is it with todays society when people are quite willing to run up debts but quite unwilling to pay them off?

poppy_f1

when my dad died last year my mum had to pay off the credit card out of the estate, she was a secondary account holder but still they had to close the card down and if my mum wanted one she had to apply in her own name
we made a bit of a boo boo and used the card to pay for the after funeral tea (was easier than carrying a lot of cash with us that day) and called the next day to inform them of my dads passing, they didnt mind as my folks always paid the bill in full but did give us a bit of a lecture for using it but we pleaded ignorance and said we thought my mum was the main card holder and they accepted it

oscar52

mastapeace wrote: »

Thankyou.
So would i be right in saying that if i transfered the ownership of my house which is paid for and mortgage free over to one of my other children, the house being my only asset, that would mean that if i went toes up then the credit card would be wiped as i would have no estate ?

Many thanks

mastapeace :cool:

p.s whats an 'AU' ?

AU authorised user (sorry, I work for a bank so am used to it!)

What you state above is basically true, however there are regulations - there is a legal time limit between the transfer and the worst happening (it used to be three years but could have changed) If anything were to happen between these times then a claim could still be made. There is good reason for the time limit (from a creditors perspective anyway) it reduces their chance of loss - some people (God forbid) get very bad news, and may only have a short time. They could do all the above and avoid paying creditors and taxman out of the estate.

You need to see a solicitor really to check, also, if i was planning this I would have some sort of formal (legally drafted) agreement stating that I could remain in the house whatever happens (but Im not sure if this is possible)

LittleVoice

oscar52 wrote: »

. . .
You need to see a solicitor really to check, also, if i was planning this I would have some sort of formal (legally drafted) agreement stating that I could remain in the house whatever happens (but Im not sure if this is possible)

Yes, if you were serious about doing any of these things see a solicitor.
Though you could try gifting the house but retain the right to live there, you would then still have an interest in the house and this could no doubt affect other financial matters.

lisyloo

Though you could try gifting the house but retain the right to live there

I don't remember the exact term but there is a difference legally between a gift that's give without conditions and one that has conditions attached.

Basically you can't have the best of both world.

I don't think you are going to be able to acheive what you want without virtually impoverishing yourself.
For example is it worth going without ANY pension just in order to get some free money at the end of your life?

I think you have now been warned sufficient about the consequences.

thumshie

LittleVoice, Lisyloo... Is my post (#10 - 'gift with reservation of benefit') missing for everyone else???

lisyloo

Sorry, I missed it.
This is because usually people quote previous responses so I made an assumption (very bad) that it contained nothing new. The important part is here.

Only 'outright gifts' count as PETs
If you make a gift with strings attached (technically known as a 'gift with reservation of benefit'), it will still count as part of your estate.

Basically you cannot "pretend" to give something away for tax reasons but still get all the legal benefits of having it as yours.
You either give EVERYTHING away or what you keep is in your estate.
Giving away everything for the rest of your life is a high price to pay to get a freebie.

If you currently have pension funds then I think it will be impossible to give these away (even if you want to) because they are untouchable until you retire or die (and even when you retire you cannot access them all at once).

LittleVoice

thumshie wrote: »

LittleVoice, Lisyloo... Is my post (#10 - 'gift with reservation of benefit') missing for everyone else???

Yes, I saw it. But mine (#16) followed #15 which included "I would have some sort of formal (legally drafted) agreement stating that I could remain in the house whatever happens (but Im not sure if this is possible)".

Perhaps I should have used emphasis on "try" in my own.

Dazza.mk_2

Agreed seek advice, you can't give the house away and continue to live in it without probable further problems down the line. In all probability the only way to do so is to gift the house to your son then~:

1. live for 7 years.
2. Pay your son a market value rent on the property whilst you live there.

But seek professional advice!