Can A Friend Give Her House To Her Son?

WoodruffsDad

A divorced friend wishes to gift her house to her son right now for absolutely nothing or maybe a nominal sum. She owns the house outright - no mortgage.

She recently retired from the caring profession and is only too aware of the difficulties of home ownership for the elderly, particulary if dementia sets in. She would also like to circumvent inheritance tax for her son in the case of her death.

She wants to gift the house now but to continue living in it with her son who is happy with this arrangement.

Can she do this legally?

G_M

yes she can do it but it is unlikely to achieve the aim.

'Deprivation of assets' - google it.

BitterAndTwisted

Yes, she can but there are risks. Some of them very grave indeed

SailorSam

Have a read of this.

http://www.savvywoman.co.uk/c8-pages/c8s3.php?art_id=250

RAS

WoodruffsDad wrote: »

A divorced friend wishes to gift her house to her son right now for absolutely nothing or maybe a nominal sum. She owns the house outright - no mortgage.

She recently retired from the caring profession and is only too aware of the difficulties of home ownership for the elderly, particulary if dementia sets in. She would also like to circumvent inheritance tax for her son in the case of her death.

She wants to gift the house now but to continue living in it with her son who is happy with this arrangement.

Can she do this legally?

Legal and sensible are different.

Assuming England or Wales

If she continues to live there then it is a gift with reservation and would still be counted in her estate for IHT purposes.

What happens if her son marries and his relationship breaks down? The house is a marital assets and ex is entitled to half of more. Ditto if he enter any insolvency arrangment.

If causes problems if he ever needs to claim benefits because of a lost job or ill-health.

Added to which nothing stops him selling up and leaving her homeless (as did not quite happen to one older person I know. She is in a caravan in part of the country she barely knows whilst son and partner are in a nice house bought with the proceeds of her marital home).

Mojisola

WoodruffsDad wrote: »

She recently retired from the caring profession

With experience like that, it's strange that she doesn't want to be able to control where she lives if she does ever need residential care.

Miss_Marple_2

I can only echo what others have said.

My mum thought about this & we went to a solicitor and she listed everything that RAS has stated :

Deprevation of assets means that they can go back as far as they like if they think you have given away an asset to avoid care home fees.

If the son ( through no fault of his own, possibly) goes bankrupt, the house is included in his assets and could be lost.

If the son divorces, the house is an asset

The house is classed as his asset when claculating benefits etc.

( I will assume she trusts her son and so won't mention that he could sell up)

It's a minefield - please advise your friend to proceed with caution and not to just assume that none of these things will happen to her or her son.

Mojisola

Miss_Marple wrote: »

I can only echo what others have said.

My mum thought about this & we went to a solicitor and she listed everything that RAS has stated :

Deprevation of assets means that they can go back as far as they like if they think you have given away an asset to avoid care home fees.

If the son ( through no fault of his own, possibly) goes bankrupt, the house is included in his assets and could be lost.

If the son divorces, the house is an asset

The house is classed as his asset when claculating benefits etc.

( I will assume she trusts her son and so won't mention that he could sell up)

Add to that the question of what happens if the son dies first?

If the son leaves the house to his mother in his will, that defeats the point of the exercise. If he leaves it to a spouse, will she let her MIL carry on living there for free?

It's also worth having in writing who is responsible for the upkeep of the house. If the boiler breaks down, does the owner pay to replace it or the occupier? Who pays for any decorating or new carpets? These kind of issues can cause a break-down in the relationship between parent and child.

System

I understood from the first post that the son will continue living there with the mother.

barba

I can think of no better place for my taxes to go than on this lady's (potential) long term care needs

getmore4less

As they are both living there what about him buying 1/2 and her having a nice retirement with the money.