Passing on Family Home Early -

LEJC

dmmsta wrote: »

Just for clarity the question here is about the legal/financial implications.

Any internal family implications will be discussed, but I appreciate the comments on this element as they will need to be covered if/when we sit down.

aside from the legal implications etc,etc.
You do need a plan for onward care,not just nursing homes which can be very expensive but also the care in home which may be needed prior to long term nursing care.

Questions for you to discuss as a family or at least make your mother aware of is does she have a financial ability to pay some of these costs without using the lumpsum of the property.

it is several years since my mother died but her care bill was quite large and to a great extent self funded from savings rather than the property.(in her case maybe in the final 3 years of her life she spent in the region of £60k on in home care and then 1 year residential)
Whilst care in the home is sometimes aided by additional benefits that can be claimed the cost if prolonged can still mount up...basics like a hour visit split between mornings and evenings can still run to several hundreds of pounds outlay per month and residential care if needed later is going to be not unrealistic at £100 per day if not more.

Simply buying a retirement property wont mean that old age is sorted....it actually just means that potentially your mother will be buying a property in a complex or development with similar aged people...and in the longterm that property can then only be sold on to other similar aged people therefore reducing the appeal on the open market...sometimes the transition of ownership is quick but sometimes families are forced to sell lower than they would like purely because at that particular time there is little or no demand.....not always as easy to sell as other property

lots of families also believe that this sort of thing wont happen to them because their relative is in good health or they have the view that they can look after "mum or dad" if things become needed...its not always the case...its hard and sometimes you need to step back from the care if you are emotionally involved....it can have a very restricting effect on you too....I've been there.

Plan ahead taking into account the worst case scenario and work backwards to what you have...that way you will have a clearer picture to see if you can possibly afford care if needed in the future without the reliance on a property value to fund it.

Be realistic now rather than assuming that it wont happen.

dmmsta

getmore4less wrote: »

your biggest stumbling block is 5. it will not be possible to account for a shortfall in the "inheritance" with your mothers will without complications.

if you start from a different angle.

Would you buy this house if it was sale?

ok you are(potentially) being gifted the difference making it look cheap/good value.

Would you still buy this house if it was actual cash?
Yes probably

Assuming this is still the right house there are other option to the scenario you outlined, they don't come without their own issues.

Whats the biggest mortgage you could get.
Around £250k

As one option is to raise more than you need and the extra goes to your brother now so the "inheritance" issue is reduced or eliminated.

The gift portion could be a debt instead but that will cause issues with getting a mortgage.

your brother could own part of the house again issues with the lender and CGT.

How much is the retirement place going to cost once you add the costs and £50k how much is left to gift?
Around £200k for retirement + £50k + costs

round my bit of southern England bungalows start a £300k. retirement flats at £100k+

I've added answers inline with your quote

Keep_pedalling

The other issue with retirement places is that if buying new there is a strong chance that the resale price will be lower, especially if the general house market flattens. This could obviously effect your brother's inheritance.

getmore4less

OK based on a £400k sale and assuming the cost are covered by cash.

You have £250k mortgage a £150k gift with a £200k bungalow sitting in mums estate.

That would be your starting point a current value calculation could give an estimate of any potential imbalance would be for point 5.

Plenty to think about.

G_M

Leaving a property to one Beneficiary in a will is always a problem. Far simpler for the will to state how the estate (or it's residue after legacies) should be divided between Beneficiaries. The Beneficiaries can then value the poperty and either sell it and split the proceeds accordingly, or one can keep the property (if they wish) with the other compensaing appropriately.

Then in your example, treat the reduced price you pay for the current house as a loan. This loan ( a known, fixed amount) would be repaid to the Estate as part of the distribution, so you'd receive that amount less than your brother.

But there are a multitude of other issues as others have said.

getmore4less

G_M wrote: »

Leaving a property to one Beneficiary in a will is always a problem. Far simpler for the will to state how the estate (or it's residue after legacies) should be divided between Beneficiaries. The Beneficiaries can then value the poperty and either sell it and split the proceeds accordingly, or one can keep the property (if they wish) with the other compensaing appropriately.

Then in your example, treat the reduced price you pay for the current house as a loan. This loan ( a known, fixed amount) would be repaid to the Estate as part of the distribution, so you'd receive that amount less than your brother.

But there are a multitude of other issues as others have said.

Mortgage lender would not be happy with a loan.

Fixing the amount also has serious present value issues.

Bluebirdman_of_Alcathays

bruich76 wrote: »

Land Registry will raise questions as will your solicitors as its a transaction at an undervalue. You could probably just about pull it off, however, you are going to have complications with Stamp Duty etc as technically a house or property has to be transferred for its full value and anything else is seen as tax avoidance. You also need to speak with an accountant regarding any tax implications as if the worst thing was to happen and passed away with 7 years - you are going to have a massive tax bill.

I note from your other thread you're a property solicitor?! If a solicitor told me this garbage I'd be in the phone to the SRA pronto.