Elderly parents - signing house over?

[Deleted User]

Before I start - I am investigating this as a LEGAL option. Please do not pontificate that its evasion or the like - I really am not interested in any posts that start an argument.

Anyway, pretty sure this is all tied up these days. Talking about where an elderly parent signs over the ownership of the house to the kids and then this is not taken into consideration in the unfortunate event that parent needs to pay for a care home.

I did look into the options a few years ago for my own dad and pretty sure got told that the 7 year rule was a myth these days and any behaviour of the sort is deemed as evasion (And the house taken into consideration anyway).

MIL is currently trying to sort her will out. BIL is adamant that she needs to sign the house over because he knows someone who did it blah blah blah and its all legal etc and once its done they can't touch the house. Personally, I think its a load of crap but BIL is not the sharpest tool in the shed. Surely, ANY attempt to do something like this would need to be justified because its just so obvious? So why did you sign the house over? Umm because I felt like? So you didnt do it to avoid paying for care fees? Umm no. Prove it.... :-)

Planning to sort MIL solictior appt to get will sorted (Will Aid November) but hoping she can get some CORRECT advice at the time.

As I said at the top, please no posts like "why should she not pay for care fees if she can afford it blah blah blah". Its like saying why should you put your money in an ISA and avoid paying tax on the interest. Theres a HUGE difference between good financial planning and evasion.

Alikay

I'm not arguing about the morals of it , just saying be very careful planning for the local authority to pick up the tab for any care she may need in the future. The maximum they'll pay may be less than the care home you choose charges, so she may end up having to live somewhere she, or the rest of you may not like. Or there may be top-up fees needed, which the person who now owns the house may not agree to pay, therefore leaving it up to the rest of you to fork out.

Keep_pedalling

Legally your MIL can do what ever she wants with the house, but she would be very foolish to do so. The transaction would almost certainly be seen as depreciation of assets, but there are potentially more serious consequences to this.

She could lose her home if her son was made bankrupt, died before her or ended up getting divorced. if she is seriously contemplating doing as her money grubbing son is suggesting then make sure she takes some professional advice first.

margaretclare

It sounds as if your MIL is being put under pressure by BIL who may have his own agenda.

A person's last Will and Testament expresses the wishes of that person and should be freely made without interference of influence from anyone.

In other words MIL should tell BIL to 'do one' and make her will expressing her own wishes and not his.

It's also worth noting that the majority of people do NOT end their lives in 'care' but in their own homes, even if they required help coming in to enable them to do so.

Pricivius

It appears you are conflating two separate issues.

The 7 year rule applies to Inheritance Tax on gifts. If the gift occurred in the 7 years before the person died, it may be subject to Inheritance Tax as part of the deceased's estate (subject to various rules and exemptions).

Deprivation of assets is part of the Local Authority means test for care home fees. The Local Authority will carry out a means test on someone who is going into a care home and will look for any assets they have disposed of and thus deprived themselves of to avoid paying care home fees. My understanding is that there is no time limit on how far back the Local Authority can go, although obviously it becomes less likely that the person gave their house away 30 years ago when they were a perfectly fit and healthy 50 year old to avoid care home fees. If the Local Authority take the view that the person deprived themselves of a £150k house, they are deemed to have £150k and the Local Authority will not fund the care home until that sum is deemed to have been reduced below the threshold.

These are the main issues you need to consider, although there are others as Keep pedalling has highlighted regarding the risk.

[Deleted User]

margaretclare wrote: »

It sounds as if your MIL is being put under pressure by BIL who may have his own agenda.

A person's last Will and Testament expresses the wishes of that person and should be freely made without interference of influence from anyone.

In other words MIL should tell BIL to 'do one' and make her will expressing her own wishes and not his.

It's also worth noting that the majority of people do NOT end their lives in 'care' but in their own homes, even if they required help coming in to enable them to do so.

Yes I would agree. Priority number 1 is MIL's needs - it is after all her house. BIL is laying it on pretty thick to be honest. My wife is trying to sort out a will (november will aid) before BIL gets his oar into this as well.

Also I appreciate that there are issues with doing this sort of thing because of things like bankrupcy/divorce etc. Deffo need to be aware of this.

Certainly MIL should not be forced to risk things like this just because family member seems to want to safeguard his inheritance.

pollypenny

Foolish idea for a number of reasons, including something that might affect the BIL who is clearly so keen.

A friend became part owner of her mother's house after it was signed over to her and her sister.

Five years down the line, it counts in her divorce settlement, meaning she appears to be comfortable, when she is far from it.

margaretclare

BIL does not have an 'inheritance' to safeguard. There is no such thing as an inheritance until someone has died. No one can/should assume they will get one penny-piece. Even if a will has been made, a revised will can be made at any time up until the person making it has breathed his/her last.

p00hsticks

You do not mention how much the house is worth but two things to consider apart from the implications relating to possible care home fees are, I believe, ;

If your MIL gifts the house but continues to live in it without paying the new owner a market rent, then it is classed as a 'gift with reservation' and the property value will therefore still be included in her estate for Inheritance Tax purposes.

If you MIL gifts the property to someone who does not then live in it, then they will be liable for Capital gains tax on any increase in value between the time she gifts it and they come to sell it.

Keep_pedalling

I would be cautious about having the BiL at the meeting, she needs a open discussion with the solicitor and not feel inhibited by having a domineering son present.

margaretclare

Keep_pedalling wrote: »

I would be cautious about having the BiL at the meeting, she needs a open discussion with the solicitor and not feel inhibited by having a domineering son present.

Yes, definitely. Solicitor and MIL face-to-face and no BIL anywhere near breathing down her neck.

I remember a solicitor I used to know. She said 'You only have to sit in this chair behind this desk for a morning and you see all the worst in humanity. Family members especially can be like circling predators'.