Transfering property deeds....

sistafromanothermista

:wave:
My MIL (who is on her own) is thinking of getting the house deeds changed so the house would then belong to my DH.
Her reasoning for this is, if she has to go into a home in the future she won't be made to sell the house to pay for it.

Is this a good enough/viable reason?
Are there any other reasons why changing the title deeds would be a good idea?
Are there any reasons why she shouldn't?


Any help much appreciated as she has been quoted £500 by a solicitor if she wants to do it. We're unsure whether her reasons are valid (as in if that could even happen)

Thanks

kingstreet

If it's mortgage-free, she can do it herself. The Land Registry website has helpful guides.

A solicitor will be needed if there's a mortgage, after the mortgage has been resolved by your partner repaying it with a new one in his name etc. The cost is between £400 and £600 for such a transfer of equity.

If your mother in law has a foreseeable need for care, this may be too late and could bring an accusation of "deprivation of assets." If she's 60 and care ends up being an issue when she's 70, that should be a long enough gap. There is no hard and fast rule on this and different Local Authorities have different policies.

I'd say within a year, definite deprivation case. Over ten years, no deprivation. Inbetween - debatable.

sistafromanothermista

kingstreet wrote: »

If it's mortgage-free, she can do it herself. The Land Registry website has helpful guides.

A solicitor will be needed if there's a mortgage, after the mortgage has been resolved by your partner repaying it with a new one in his name etc. The cost is between £400 and £600 for such a transfer of equity.

If your mother in law has a foreseeable need for care, this may be too late and could bring an accusation of "deprivation of assets." If she's 60 and care ends up being an issue when she's 70, that should be a long enough gap. There is no hard and fast rule on this and different Local Authorities have different policies.

I'd say within a year, definite deprivation case. Over ten years, no deprivation. Inbetween - debatable.

Hi, thanks for your reply.
There is no mortgage on the property and she is not in need of immediate care (she's fit as a fiddle) but who knows what's around the corner?

So would you say it's a good idea to do it? or would make little/no difference at all?


Sorry, also would it be this
http://www.landregistry.gov.uk/_media/downloads/forms/AP1.pdf

form to change the house into DH name?

Mojisola

sistafromanothermista wrote: »

:wave:
My MIL (who is on her own) is thinking of getting the house deeds changed so the house would then belong to my DH.
Her reasoning for this is, if she has to go into a home in the future she won't be made to sell the house to pay for it.

Is this a good enough/viable reason?
Are there any other reasons why changing the title deeds would be a good idea?
Are there any reasons why she shouldn't?

This gets asked so often, it's probably worth having a sticky pointing out the things to look for.

Unless your MIL can show another reason why she gave her home away, it will be seen as deprivation of capital. There are a lot of means tested benefits that she may want to apply for long before residential care is ever needed which she will be unable to get.

Your OH will also be unable to claim means tested benefits because of owning another property so he'd better not get a long term health problem or be made unemployed.

If she does it, your OH will need to make a well-written will and think about what would happen to Mum if he dies first.

Has your MIL ever been round the homes that the council will pay for and compared them to the ones she could choose to go in if she had the money to pay?

sistafromanothermista

Mojisola wrote: »

This gets asked so often, it's probably worth having a sticky pointing out the things to look for.

Unless your MIL can show another reason why she gave her home away, it will be seen as deprivation of capital. There are a lot of means tested benefits that she may want to apply for long before residential care is ever needed which she will be unable to get.
WHY WOULD SHE BE UNABLE TO GET THEM?
Your OH will also be unable to claim means tested benefits because of owning another property so he'd better not get a long term health problem or be made unemployed. THIS IS INTERESTING,THANKS, DEFINITELY WORTH CONSIDERING. ALTHOUGH WE HAVE A MORTGAGE AND I'M WORKING SO UNSURE IF HE WOULD BE ABLE TO CLAIM ANYWAY....

If she does it, your OH will need to make a well-written will and think about what would happen to Mum if he dies first. IT WOULD BE IN JOINT NAMES BETWEEN HIM AND HIS SISTER

Has your MIL ever been round the homes that the council will pay for and compared them to the ones she could choose to go in if she had the money to pay? NO BUT SHE/WE HAVE FAMILY IN A PRIVATE HOMES AS SHE HAS SAID THE STATE ONES ARE NOT THE BEST

Thanks for some clarification on the above. At the moment she has no mortgage and her income is from private pensions from DH father when he passed away. She has quite a considerable amount of savings too which would be used if a home ever came into play (although we would try our best to take her in ourselves first)

I guess one of the ideas was this;
If MIL was ill to the point of not being able to care for herself, house would be in DH and his sisters name. We would then be able to sell the house and with the 50% of the proceeds DH would give up work to care for her at home (our home)

Any potential flaws in this?

Mojisola

sistafromanothermista wrote: »

Thanks for some clarification on the above. At the moment she has no mortgage and her income is from private pensions from DH father when he passed away. She has quite a considerable amount of savings too which would be used if a home ever came into play (although we would try our best to take her in ourselves first)

I guess one of the ideas was this;
If MIL was ill to the point of not being able to care for herself, house would be in DH and his sisters name. We would then be able to sell the house and with the 50% of the proceeds DH would give up work to care for her at home (our home)

Any potential flaws in this?

She wouldn't be able to claim means tested benefits if she has given away the capital tied up in her house. If she has extra pensions coming in, that may not be an issue because her income may be too high to claim anything.

As she has savings, will inheritance tax be an issue? If so, giving the house away creates two problems - one, it will be a gift with reservation and will still count for IHT; two, the owners of the house will be liable for any capital gains tax when the property is eventually sold.

If you can guarantee that you know the future and will be in a position to sell the house and will be able to care for her needs, that could work. Would there be any resentment that SIL is walking away with her 50% of the house while your OH is spending his on his mother? What if the SIL doesn't like the idea of selling the house when he needs to?

There are plenty of things to think about and plenty of "what ifs" to consider.

sistafromanothermista

True, i never really thought about any of that!
Inheritance tax is over 500k? if so then no she hasn't got that much.
That's given us lots to think about. Thanks very much for your help

Yorkie1

It's £325K.

Mojisola

Yorkie1 wrote: »

It's £325K.

Plus whatever remains unused from her husband.

sistafromanothermista

Like pensions?

holly_hobby

The nil rate IHT threshold is 325k per person.

If her husband died without making any non-exempt transfers, the administrators/executor of MILs estate, may apply to tsf hubbys unused 325k to add to MILs unused nil rate band - nice and straight forward, with a max 650k nil rate band.

HOWEVER, this all changes if FIL made any non-exempt gifts or transfers during his lifetime (ie any gift with reservation, or unexpired PETs). As in this situation, its no longer simply a case of applying to transfer the residue of 325k (ie he made a non exempt gift of 25k, so 300k is avail for transfer), but instead the avail balance is calculated as a percentile of the nil rate band, with the percentile calculated when taking into account the value of any non exempt gifts/tsfs at time of death.

With regards to deprevation of assets, then this would be relevant if she or her representatives sought any LA assistance for care home costs - and it was determined that it was reasonable to assume that when the tsf was made MIL had reason to suspect she may later seek care home fees assistance (kings has discussed this in detail for you).

If there is no qualificaton or requirement for MT benefits or long term care assistance, then the tsf of equity to your Hubby won't be a cause for concern.

IHT exposure and gift with reservation regs has been discussed.

The non-resident owners will be subject to CGT on any gain on disposal (gain being the difference between market value at transfer and sale price, less permitted reliefs, allowances and deductions that may apply at the time).

Given that each person also has their own annual CGT allowance, would hubby and MIL be happy to tsf the property into both your names, so that 2 x Annual CGT exempt band may be utilised on disposal ( which for example are £10,900 pp for tax yr 2013/14), and will be much simpler than later trying to prove beneficial ownership in order to utilise both CGT allowances if only hubby is legal owner.

There may be pitfalls and issues afoot, so before any action is taken, please, please sit down with a solicitor and discuss the why and wherefore's of effecting the tsf - and include the rest of his siblings in the discussions to avoid later issues (as money has a funny old way of causing right ding dongs in otherwise close families !)

Hope this helps a little

Holly x