To put a property in "Trust."

EdInvestor

treacletoffee wrote: »

Be very careful about signing your home over to your children. I have recently worked on a case where a lady did just that, and several years later her daughter refused to allow her to remain living in the house! The lady was effectively homeless and ended up in residential care.

It doesn't work anyway: you either get caught for deprivation of assets in re care costs, or gift with reservation of benefit in re inheritance tax.

Plus the child has to pay Capital gains tax upon the sale.

treacletoffee_2

EdInvestor wrote: »

It doesn't work anyway: you either get caught for deprivation of assets in re care costs, or gift with reservation of benefit in re inheritance tax.

Plus the child has to pay Capital gains tax upon the sale.

I'm not quite sure what you mean by 'it doesn't work anyway'. ?

The fact was that the lady had signed the house over to her daughter several years before, and the daughter had no intention of selling it. The outcome was extremely distressing for the lady in question. I did ask whether she wanted to take legal advice about the matter, but she felt unable to pursue this option because of her ill-health.

I can quite understand why some may feel it is 'unfair' to have to use their savings and assets to fund their care, but at least this gives them some choice and control over their lives that others who are less affluent may not have.

EdInvestor

What I meant was that if the aim of signing over the property was to avoid IHT or avoid losing the property to pay for care, then not only is it unlikely to achieve that outcome , it could also have other unpleasant consequences such as the one you mention (for the parent), plus the liability to CGT (for the child).

localhero

Married couples, by taking professional advice, can if they so wish safeguard the family home from paying care fees in the future. It is not my job to question their ethics as to who should pay - I just tell them the law.

Many, given the choice choose to preserve as much of their hard earned wealth for their families rather than hand it over to the local authority (or the tax man for that matter).

It is only after not taking professional advice (usually after becoming widowed do people start worrying about it). By that time it's too late. It is illegal to transfer your property to relatives if your motive is to avoid care fees.

So for those married couples out there who do wish to minimise their liability to care fees, you have a choice. Consult a professional willwriter and get it sorted. (https://www.ipw.org.uk - 500 members uk wide, and I declare myself a member).

EddieQ

EdInvestor wrote: »

It doesn't work anyway: you either get caught for deprivation of assets in re care costs, or gift with reservation of benefit in re inheritance tax.

Plus the child has to pay Capital gains tax upon the sale.

Depends what you mean by -'it doesn't work' - If an elderly person gifts their home to one of their offspring but continues to live in the home, then say 8 years later needs to move into residential care, then sure , for IHT purposes the home does remain in the elderly person's estate and yes, the child may well eventually cop for a significant CGT tax bill ... BUT... when it comes to the local authority 'clawing back' the gift the most they can claim in law from the gift's recipient is - recover the value of the property at the time the transfer of the deeds occurred i.e. 8 years before . End of Story. The council may still (understandably) jump up and down and claim 'deprivation of assets' - and demand all the proceeds from the house sale but in a court of law they can't enforce that - only the value of the property at the time of the gift. After all, this is logical as the child will be taxed on the increase in the property's value since the time it came into his/her possession.

mary43

Being a 'newbie' on here I'm still finding my way round so forgive me if I've already said this on other threads.
I'm 64 and hopefully have a good few years ahead of me but after my Mum had her stroke three years ago the realisation that just overnight life can change so drastically made me think seriously about the future.
I don't want to be a burden to my kids should the worse happen.....I'd prefer to be in a home. My Mum is in a small flat in a domicilary care place run by Extra Care. They have a lot of retirement 'villages' as well as other places like my Mums. The staff are brilliant, couldn't have picked better and thats the kind of place I'd like to be. Considering sorting out POA and signing over the house to my kids. I always wanted them to have it along with the grandchildren.