Gifting of property advice

vivvov

Hello All

Unfortunately, my father suddenly passed away over Christmas.
My elderly mother is still alive and fairly healthy but today she talked to my brother and I about wanting to move into sheltered accommodation, managed by a local housing association.
Dad used to look after all the maintenance issues on their 3 bed bungalow and Mum feels that, even though her health is ok, she has mild angina and has previously suffered a heart attack (10 years ago..no obvious impairment) so continuing to live in the house will be too much for her to manage.

Part One....Mum has an idea, she is thinking of gifting the proceeds of the sale of the bungalow to my brother and me.

This on the back of Part Two....An older cousin of my Mum with no direct heirs has made a will stating Mum has their beneficiary and the cousin has also gifted something substantial to her 3 years back (so well within 7 years and therefore potentially coming into play).

Mum's not exactly sure of the ins and outs of it but, in total, it's a rather large amount Inheritance Tax threshold wise (even taking into account doubling up due to Mum and Dad being married) so Mum has the idea of gifting her bungalow proceeds in an attempt to manage things prior to her own demise.

It's all feels a bit bizarre. The idea of gifting has stuck in Mum's head and, now Dad had passed away, she says she is no spring chicken and sees gifting the proceeds from her bungalow as potentially a way of managing Inheritance Tax issues that she now sees looming on the horizon if her 82-year-old cousin passes away before Mum does (Mum's 76).

At present, Mum's home is her only major asset bar an ISA with a few thousand pounds in it, so as of tomorrow Mum will be applying for Pension Credit in order to rejig and top up her pension amount due to Dad's death.

As I said it all seems a bit bizarre. Prior to these recent events, none of us has had any major assets to speak of so my Mum, brother and I are new to all this.

As I see it, Mum can sell the house, gift the proceeds and move to sheltered accommodation (Warden assisted but not onsite care) and, presumably be eligible to Pension Credit and therefore linked to other related benefits (Housing Benefit, CT Benefit etc) due to having savings at present that are well below saving thresholds. If Mum lives for 7 years..and she says she does intend to do so... then her gift of the bungalow proceeds will incur no Inheritance Tax

(Chances are she will inherit a substantial amount from her 82-year-old relative and then possibly things will change again, benefit wise, due to her savings suddenly being way over savings thresholds?? and then we'll have to get more advice....)

Anyway, as you can see we haven't got much of a clue but I thought I'd post a new thread to start to figure out if the above post is correct in part or completely incorrect throughout.

Many thanks in advance for replies.

elmer

Surely, she cant claim Pension credit and then give you the value of her house, she will need to live off the proceeds rather than claim benefits?

elmer

Techno

I am sure there are some laws linked to deprivation of assets and claiming benefits. There definitely is when older people gift their properties to children so they don't have to pay for nursing home care. If the council thinks this has happened they can claim the money back and I am sure other benefits must have a similar clause. I would definitely seek some professional advice before your mum does this.

Triumph13

You need to google 'Deliberate Deprivation of Assets'.
Unsurprisingly the law doesn't let you give away large sums to your children and then expect the taxpayer to pick up the bill.

p00hsticks

vivvov wrote: »

As I see it, Mum can sell the house, gift the proceeds and move to sheltered accommodation (Warden assisted but not onsite care) and, presumably be eligible to Pension Credit and therefore linked to other related benefits (Housing Benefit, CT Benefit etc) due to having savings at present that are well below saving thresholds.

You might get more definite answers over on the benefits board, but I don't believe she'd be allowed to give away the proceeds of her property sale and then start claiming Pension Credit - look up 'deprivation of assets'. Proceeds of the house sale can be ignored for a period of time for benefit assessment only if they are to be used to purchase another property.

le_loup

vivvov wrote: »

As I see it, Mum can sell the house, gift the proceeds and move to sheltered accommodation (Warden assisted but not onsite care) and, presumably be eligible to Pension Credit and therefore linked to other related benefits (Housing Benefit, CT Benefit etc) due to having savings at present that are well below saving thresholds.

Of course not!
Just think about that paragraph.

Browntoa

There is also TUPE / IHT if she doesn't live at least 7 years

You need professional advice to manage her affairs but the way I read it you have left it way too late

WillowCat

You say the cousin has already gifted her 'something substantial' to her three years ago but she has only a few thousand in an ISA?

As others have said deprivation of assets will come into play should she try to claim pension credit, housing benefit or council tax benefit if she has given away the value of her home.

Would it be possible to persuade the cousin to bypass mum altogether and leave her assets to you? Mum could then sell her house, buy another more suitable property, and use the proceeds of downsizing to top up her pension, or if little money left (sometimes a suitable smaller property can cost as much as a family house) she could then claim pension credit.

xylophone

Will your mother's income be so low as to qualify her for pension credit?

http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS48_Pension_Credit_fcs.pdf?dtrk=true

Is there no widow's pension from your father?

She may well qualify for an increase on her state pension on your father's contributions/ may inherit additional pension from him.

And see http://www.entitledto.co.uk/help/savings-over-60

And the cousin may outlive your mother. Reaching the mid nineties and beyond is no longer uncommon.

Kynthia

As others have said you can't give away your assets and then claim benefits you wouldn't have been entitled to otherwise. If your mum wants to sell her property rather than be responsible fir it's maintenance then she can but if she needs the money to live on then she should keep it.

She shouldn't rely on getting this inheritance from her cousin. She may pass away first, they could change their will or tgey could end up spending or giving away their assets in the meantime. However even if she did inherit she may not be exceeding inheritance tax in what she leaves her children if she's been living off the proceeds of her property. If her estate looks likely to exceed IHT threshold then she could look at a deed of variation to pass the inheritence fro the cousin directly to her children which is commonly done to legally avoid IHT.

slopemaster

If her husband has only just died, I think you should be encouraging your mum to take NO irrevocable decisions for at least several months, preferably a year.
My mum initially talked of moving to sheltered housing after dad died. I wasn't at all sure it would be best for her. I didn't argue against it, but persuaded her to wait. She then decided to stay in her own home and was glad she hadn't decided anything whilst still in shock. She was able to live at home until the end. Its always possible to get cleaners/gardeners/handymen, and maybe you could organize these for your mum if she decides to stay at home.