Lifetime gift of property with conditions?

vigman

Hi
Hopefully the right part of the forum?

Someone in the family wants to gift a property to our son which he currently lives in.

However due to mental health issues they don't want him to have the right to sell it in his lifetime (in order to guarantee a roof over his head even after their, and our, deaths).

Equally she doesn't want a future partner or wife to have any claim in the property should their be a break up or divorce (and a relationship has just ended as the girlfriend only wanted western citizenship)

Is it possible to gift a property with such conditions please? If so what has to be done?

TIA
Vigman

seashore22

I doubt it. A gift is a gift, even in law and it's up to the recipient what they do with that gift.

Why can't they carry on with the current arrangement?

LdnFtB

An alternative to a gift might be a trust - therefore ownership doesn't pass to him but he retains the right to occupy.

Browntoa

Yes, needs to be a trust

And drawn up by an expert , needs to be done correctly

Robin9

As it stands today what happens to the property on the death of the owner ?

davidmcn

As above, why the change from the current arrangements? They could set up a trust if they wanted to formalise that he's got a lifetime right to occupy the property (though consider things like who's responsible for maintenance, insurance etc, can he let it out, what happens if he wants to move...).

seashore22

Even if a trust is able to do what the op wants, I'm not sure that forcing someone to own a house until their death would necessarily be in their best interests. Things change and even mentally ill people need choices.

00ec25

seashore22 wrote: »

Even if a trust is able to do what the op wants, I'm not sure that forcing someone to own a house until their death would necessarily be in their best interests. Things change and even mentally ill people need choices.

a trust would be precisely the mechanism needed to meet the OP's wish.

if the trust is drawn up by "experts" (solicitor) and the OP mentions it, then the trust should also allow for the person with the lifetime interest to change property and the trust pay for a replacement

it will of course cost money to set up a trust and the trust may, on occasion, have to pay tax on some of its financial activities but a trust is the best way forward. Who would administer it going forwards would also have to be considered obviously and may incur an ongoing cost in itself

vigman

Thanks for all the quick comments.

Restrictions are because in the past when ill he has gone on spending binges and owed thousands. If he knew he could sell it, he would and probably gamble it away or buy bad investments.

The family member doesn't want to think of him destitute ever. Owning the property with these conditions would not stop him renting it out and living somewhere else for example.

The family member wanting to make the gift wants to start reducing their own IHT commitments and hope to live until there is no IHT on this flat.

I thought trusts would come up but who sets them up and how, and who the trustees nominated are always seems incredibly complicated.

Note: Hadn't seen 00ec25's post before writing this!

TIA

Vigman

seashore22

00ec25 wrote: »

a trust would be precisely the mechanism needed to meet the OP's wish.

if the trust is drawn up by "experts" (solicitor) and the OP mentions it, then the trust should also allow for the person with the lifetime interest to change property and the trust pay for a replacement

it will of course cost money to set up a trust and the trust may, on occasion, have to pay tax on some of its financial activities but a trust is the best way forward. Who would administer it going forwards would also have to be considered obviously and may incur an ongoing cost in itself

Thank you for that. I must admit that I wasn't aware that trusts could be that flexible and that may help the op.

DaftyDuck

Been close to similar situation, Trust should hold the house, or funds from sale of the house for housing needs. That allows the occupant (Trust) to sell the house and buy another that may be more suitable to the occupant over time. In the case I was involved in, the Trust had to be redrawn (at £££) to allow sale of large, rambling house to allow old dear into a bungalow. Original Trust deed/solicitor hadn't allowed for that, and it's an obvious need in this long-lived age of ours.

Remaining cash on sale was invested by the Trust, some used for modifications to house as aged one aged further, until the inevitable, when the Trust was wound up, according to terms.

This aged one was a willing participant, with no intent or desire to defeat the object of the Trust. Your situation may be different.

There are solicitors who are (well there were) "Age Concern Friendly", which was relevant in this case. The running costs of the Trust were minimal (sale of house/purchase of next was done at 50% reduced fee by solicitor-colleague of Trustee), annual running costs being non-existent, even using a solicitor. Solicitor handled reinvestment of assets on sale. Two other Trustees (me, one other, who opted to change as she became aged herself).

Aside from the sales, the total costs over 25 years were well under £1000.

Edit: they are now AgeUK recommended solicitors, but I don't know if they are now just bunging money for accreditation. Worth appointing one solicitor as Trustee, and one or more laypeople. Choose younger than beneficiary if possible, but standard Trust wording seems to have a form to replace a Trustee.

Edit edit: Seems like the AgeUK charity either no longer recommend solicitors directly, or never officially did. There do appear to be some solicitors who claim to be age-friendly...