Elderly parents - signing house over?

euronorris

[quote=[Deleted User];69428842]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.[/QUOTE]



It's true it could be classed as deprivation of assets by the Local Authority, should she need to go into care. This is not time-barred, but some common sense will be applied with regards to the time passed, as other posters have suggested.


It's worth noting, and probably worth pointing out to your BIL, that as the LA would likely class it as a 'notional asset' that has been purposely gifted in order to avoid paying care fees, they can (and likely would) seek to recover it from him in order to pay the care fees.


Age UK offers some great factsheets on this. Here you go: http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS40_deprivation_of_assets_in_the_means_test_for_care_home_provision_fcs.pdf?dtrk=true

[Deleted User]

pollypenny wrote: »

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 mans she appears to be comfortable, when she is far from it.

Yes and I understand the same if bankrupcy occurs. Since there are four kids then all it takes I guess is for one of 8 people to either get into financial trouble or instigate a divorce etc.

[Deleted User]

margaretclare wrote: »

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.

Totally agree. My wife and I are of the same opinion. She doesnt expect a penny from her mother and I dont expect a penny from my father. I'd rather they looked after themselves and spent it all.

[Deleted User]

p00hsticks wrote: »

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.

Worth about £130K I guess. Not a huge amount.

[Deleted User]

Malcnascar wrote: »

What does the MIL want to achieve?

It appears she owns her home and has family, not sure if she is a widow, but you imply at least 2 siblings.

Her will deals with her assets, if any, at the time of her death. By and large she is free to leave her wealth to whom she wishes and most solicitors can advise her on this and draw up a will which reflects her wishes.

As regards her home, which she presently owns, this is hers to do with as she pleases. Ask her why she would want to become a tenant. There are many disadvantages to her in transferring ownership to family members, some have been mentioned already.

I recently re wrote our wills and they cost £75 plus VAT, again your MIL could ask the solicitor to guide her on the pro's and cons of transferring ownership of her home. If it were me I would gladly pay the small cost of getting the correct advice for your MIL. Indeed, I would encourage the BIL to attend, solicitors can often spot signs of family pressure and guide accordingly.

Yes she is a widow. 4 kids.

TBagpuss

It's good that you're encouraging your MIL to get proper advice. Be aware that Will Aid will only cover making a staraight forward will.
It would be sensible for your MIL to arrange an appootment with an experiences private client solicitor who(loook for one who is a member of STEP) who can advise her about the pros and cons of making any changes.

Suigning her houe over to BIL is probably a very bad plan. Legally, of course she can do it if she wants to but:

- It leaves her very vulnerable if BIL gets into debt, gets divorced, or simply decides he wants to take advantage
- If she ends up going into care, or needs to claim benefits, it would be seen as a deprivation of assets and could be clawed back
- If there are provisions made to protect her against the risks of BIL getting divorced, getting into debt or getting greedy, then if they are effective for that puspose, they will probably also mean that the gift is not absolute and so won't sheild her from other issues such as claw back.
- it potentially makes it very difficult for her if she wanted to downsize or move.
- As it is relatively low value, it's unlikely that she need wory about inheritance trax, but the same problems arise there.

It may be worth her considering a Power of Attorney, perhaps to your wife and one of the other children, and/or putting the house into the names of 2 of your MILs children with a decalration of trust that they hold on trust for MIL.
This could make it much more difficult for her to be manipulated or pressured into singing it over inappropriately. The PoA would also make things much easier if she were to become ill and unable to manage her own affairs, in the future.

Obviously the trust idea would only really be needed if you think NIL 's motives are dodgy. If he is genuine but misinformed then knowing that his mum has seen a solicitor and taken professional advice would reassure him. If not, then getting the advice and getting safeguards in place might protect MIL - she can then simply tell him it's all sorted and/or refer him to whichever family members she has named as trustees.

CathA

My mum's neighbour had a lovely little bungalow. As she had no children, she signed it over to her nephew, lovely man, loved his auntie. (Yea, right!!)

Long short story, he took out loans against the bungalow without telling her, bungalow was repossessed, she was homeless but luckily the council re housed her in an old peoples bungalow in the same town. However it was the other side of town and my mum couldn't visit her as often as she couldn't drive (bear in mind that at the time my mum was no spring chicken herself). No more visits from the lovely nephew, no longer had a garden to potter in, no daily visits from my mum.

I appreciate it's her life and her choice but DON'T LET HER DO IT!!!

margaretclare

CathA wrote: »

My mum's neighbour had a lovely little bungalow. As she had no children, she signed it over to her nephew, lovely man, loved his auntie. (Yea, right!!)

Long short story, he took out loans against the bungalow without telling her, bungalow was repossessed, she was homeless but luckily the council re housed her in an old peoples bungalow in the same town. However it was the other side of town and my mum couldn't visit her as often as she couldn't drive (bear in mind that at the time my mum was no spring chicken herself). No more visits from the lovely nephew, no longer had a garden to potter in, no daily visits from my mum.

I appreciate it's her life and her choice but DON'T LET HER DO IT!!!

This is a cautionary tale illustrating what can happen. It should be written in bold and pinned up everywhere!

'Lovely' nephew, son, brother, daughter, whoever. Money and possessions - or the possibility or even the smell of them - brings out the worst in human beings.

In the case illustrated, auntie was naive, innocent, trusting, thought the best rather than the worst of people, the kind we read about all the time being taken for a ride and losing all they possess. 'Oh I thought he loved me...' or 'oh I just wanted to help him' - the permutations are endless.

We also read about 'signing your house over to avoid care fees', time and time again, on this and other boards on Martin's site. The 50+ savers board sees it time and again.

DH and I are both 80. There is no way on God's earth that anyone, family or otherwise, will be given any of our major possessions while we both still breathe. It was too hard-won for that. We don't give a thought to 'going into care', something which seems to exercise the minds of people a decade or more younger than us. It's possible we may need care assistance coming in, in which case we need our resources to pay for it.

Leave people a legacy by all means, but retain the use of your resources yourself for as long as you need them.

SeniorSam

Forget the 7 year rule. This only comes into play if there were to be an inheritance tax liability, as intimated by others. If her late husband gifted all his assets to her, then on her death there will be an allowance of £650,000 before any inheritance tax consideration, so I doubt any tax will be needed

If your MIL is set on gifting her house away, which may not be a good idea, it would be better gifting it into a Discretionary Trust, with several family members as Trustees. They will determine how that will be settled and hopefully it will be in accordance with MIL's wishes in her Will. That would be safer than gifting to the BIL. The only other consideration is that when the Trust disposes of the assets (the house), there may be a Capital Gians Tax to consider after the allowance.

Whatever the outcome in respect of care costs, if MIL does need care, then consider that it will all need to be paid by the assets of the MIL and theTrust and do not consider otherwise. That way 'deprevation of assets' is not something that will be raised.

Do take professional advice without BIL being present, as stated above.

Sam

[Deleted User]

CathA wrote: »

My mum's neighbour had a lovely little bungalow. As she had no children, she signed it over to her nephew, lovely man, loved his auntie. (Yea, right!!)

Long short story, he took out loans against the bungalow without telling her, bungalow was repossessed, she was homeless but luckily the council re housed her in an old peoples bungalow in the same town. However it was the other side of town and my mum couldn't visit her as often as she couldn't drive (bear in mind that at the time my mum was no spring chicken herself). No more visits from the lovely nephew, no longer had a garden to potter in, no daily visits from my mum.

I appreciate it's her life and her choice but DON'T LET HER DO IT!!!

Aw thats so sad. Good reason not to do it. People get greedy....