New home in daughters name?

poledancer49

Down sizing and will be buying new home outright. Just thought....could we put the house in our daughters name rather than ours to protect our assets if we beome ill in our old age and government will make us pay for care?

We have both worked hard all our life and don't see why our daughter's inheritence should go to pay for our care if required. Not interested in replies who are going to slate my question...just some good old fashioned advice please.

Yorkie1

Will she be living there too?

Does she claim any means-tested benefits?

If she ever needs to claim them while you live there, this property will mean she is unlikely to be able to claim them as it will form part of her assets, I believe.

If she ever gets into financial difficulties, she might be made to sell the house in order to repay creditors. You'd be made homeless with no right of appeal.

If she meets someone, it is possible that they would eventually be able to have a claim on the property. You could be at their mercy if the worst occurred.

Who will be responsible for maintenance?

She will probablyhave a whopping capital gains tax bill when the house is eventually sold, assuming it is not her principal residence.

It would still form part of your estates for inheritance purposes as you remain living there (and, presumably, not paying full market rent).

It may have an impact on her if she ever wants to buy another property, depending on how potential mortgage lenders view it.

Frankly, the risks to your future security are great. The potential impact on your daughter's life between now and your death is significant. The chances of you needing home / residential care is, statistically, apparently pretty low.

I think it's a high risk strategy.

hcb42

your daughter's inheritance is what you have left at that time that you can then leave her, after you have lived your life to the end, you don't say how old you are, but there is no "right" to an inheritance and certainly not at the expense of others (who would ultimately then pick up the care bill) no matter what the perceived unfairness of this might be.

deprivation of assets is the key to your question i guess.

Fire_Fox

poledancer49 wrote: »

Down sizing and will be buying new home outright. Just thought....could we put the house in our daughters name rather than ours to protect our assets if we beome ill in our old age and government will make us pay for care?

We have both worked hard all our life and don't see why our daughter's inheritence should go to pay for our care if required. Not interested in replies who are going to slate my question...just some good old fashioned advice please.

So not a good idea if you daughter's circumstances ever change and she gets into debt or needs to claim benefits - illness, injury, redundancy, nightmare pregnancy, sick baby, divorce - she will own an asset she doesn't live in and would be expected to sell it and spend the money. Or at the very least change you market rent and deal with the reams of taxation and legislation surrounding landlording.

It's not your daughter's inheritance until you die and she inherits which is presumably (hopefully) some time off yet, it's your asset that is why it would be used to pay for your care. It would not be used for that purpose if one of you were still resident anyway only if there was an empty property, and current government is capping the amount that can be used on care.

Personally I'd prefer my parents to have the best care their money can buy rather than rely on state provision. That is based in part on my mother taking several months to extract funding from the local council for my grandmother's care needs, during which time she had to remain in hospital unnecessarily. In the end she was in (the most wonderful) care home for just a few weeks before she passed.

alun4

You can give her the proceeds of your sale and then live for 7 years.

The above replies only scratch the surface of potential problems but for some this could work.

poledancer49

Thank you Alun4 and others. You have all said what I have already thought and you have confirmed my worries.

paddedjohn

alun4 wrote: »

You can give her the proceeds of your sale and then live for 7 years.

The above replies only scratch the surface of potential problems but for some this could work.

I believe the above is only for inheritance tax issues, the dwp can go back as far as they want if they believe you have deliberately deprived yourself of assets to claim benefits. If the property is in your kids name then there is also other implications not leat capital gains problems on your death, affecting their right to claim benefits, needing to have gas certs etc and on top of all this what if they were to marry and then divorce while you were still alive? The property would then become part of any settlement and may have to be sold from under you.


Plus on top of all that, why should your kid benefit at the expense of the rest of us???

MobileSaver

poledancer49 wrote: »

We have both worked hard all our life and don't see why our daughter's inheritence should go to pay for our care if required.

I've worked hard all my life... why should my taxes pay for your care so that your daughter can get rich?

poledancer49

Just as I expected....or course..my daughter getting rich because I have never claimed a penny from the state all my life and I have paid for every penny for the house I own. I don't plan to get ill but lets just give the money to the state now and save all the hassle.

paddedjohn

It's simple really, live your life in you're house and if you don't need care in your old age then you can pass on your house to her when you die. If however you find you need care then you have an asset to pay for it, think of it as selling up and moving into a hotel.

InMyDreams

Assuming your daughter is not living there, I believe all the above about deprivation of assets, daughter's circumstances changing, effect on benefits, morality... is irrelevant anyway because you wouldn't actually achieve what you are setting out to do anyway.

If your daughter is not living there (and you aren't paying her a market rate rent on which she will be taxed) if you give her the house, it would be a gift with reservation of benefits and no matter how long you lived, it would still count as part of your estate for IHT purposes. The 7 year rule would not be relevant in this case.

If you daughter *was* living there, then you can gift her 50% of the value of the house without it counting as gift with reservation. (And all the comments above stand.)

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/pass-home-to-children.htm