Deprivation of assets

enthusiasticsaver

I haven't got a clue why your parents would want to do this as it effectively takes away their largest asset in most cases which could help them fund their old age. Certainly state run homes in our area are not great and there is so much potential for things to go wrong if they fall out with the family for some reason or as others have said, divorce or death.

We have helped our children considerably through education, university and their first homes. If there is money and assets left at the end of the day obviously we want as much as possible to go to them but not at the expense of our comfort in our old age and I do not think they would want us to compromise that. Same goes for my mums assets, her home is there as a safety net to provide for her hopefully in a private care home if she needs residential care. Some people don't.

As others have said there is such a thing as deprivation of assets so if the reason for passing the house over to children now while still living there is to avoid paying for care home fees if needed that may be examined further should they have to go into care relatively shortly after disposing of their home. I think they also cannot benefit from the gift so I fail to see how they can continue living in the house in the meantime without paying you rent.

enthusiasticsaver

From your point of view you will be a property owner so you will gain no benefits from HTB ISA or first time buyer stamp duty exemption when you come to buy your own home and even some mortgage products will not be available to you. If for any reason you need to claim benefits you may be exempt due to owning assets.

pensionpawn

Mojisola wrote: »

Only a small percentage of people end up in care homes.

The average stay is only a couple of years.

While one spouse continues to live in the house, its value is not included in the financial assessment.

If your parents own their home as 'tenants in common', they can leave their share to the children rather than the spouse (with the usual lifetime conditions, etc). That will preserve half of the value of the property.

If your parents do need care and are relying on the council to pay for it, they may not like the places they are put.

I would love to leave our children some money but I'm not going to do it in a way that might mean my last few years are spent in a miserable, poorly-financed care home.

We updated our will last year to do this. My wife and I wish to protect and pass on at least half of the value of our house to our children.

zagfles

pensionpawn wrote: »

Originally Posted by Mojisola
Only a small percentage of people end up in care homes.

The average stay is only a couple of years.

While one spouse continues to live in the house, its value is not included in the financial assessment.

If your parents own their home as 'tenants in common', they can leave their share to the children rather than the spouse (with the usual lifetime conditions, etc). That will preserve half of the value of the property.

If your parents do need care and are relying on the council to pay for it, they may not like the places they are put.

I would love to leave our children some money but I'm not going to do it in a way that might mean my last few years are spent in a miserable, poorly-financed care home.

We updated our will last year to do this. My wife and I wish to protect and pass on at least half of the value of our house to our children.

You still end up with a lot of the problems mentioned in this thread. Such as possible CGT, extra stamp duty if any of the children move house, losing part in a divorce, getting denied means tested benefits if they fall on hard times and possibly being forced to sell their share.

Eg see this thread where someone who part owned an inherited property is faced with a massive stamp duty bill because of it https://forums.moneysavingexpert.com/discussion/5762406

pensionpawn

zagfles wrote: »

You still end up with a lot of the problems mentioned in this thread. Such as possible CGT, extra stamp duty if any of the children move house, losing part in a divorce, getting denied means tested benefits if they fall on hard times and possibly being forced to sell their share.

Eg see this thread where someone who part owned an inherited property is faced with a massive stamp duty bill because of it

There are no financial implications to our children of the trust element of our Will until both parents are deceased. At that point a minimum of half of the value of the house is transferred to the children as per any other Will. If no care fee debt is due from the second parent, on their death, then our Will is executed no differently to any other Will and the whole estate will pass on as specified, minus the usual costs.

zagfles

pensionpawn wrote: »

There are no financial implications to our children of the trust element of our Will until both parents are deceased. At that point a minimum of half of the value of the house is transferred to the children as per any other Will. If no care fee debt is due from the second parent, on their death, then our Will is executed no differently to any other Will and the whole estate will pass on as specified, minus the usual costs.

OK so you're using some sort of trust - that might avoid some of the problems.

Browntoa

Council can still challenge a trust if it's believed to have been done to avoid care home fees

http://www.bbc.co.uk/news/business-39589083

Browntoa

http://dailym.ai/2mpZMmQ

System

"My parents would like to put their house in my name (and my siblings) in order to protect their assets from being used should they go into a care home."

This suggests they are already fairly well-advanced in years to even be thinking about it, in which case it is very probably too late for such moves to appear plausible for any other reason.

TrickyDicky101

Browntoa wrote: »

Council can still challenge a trust if it's believed to have been done to avoid care home fees

http://www.bbc.co.uk/news/business-39589083

I believe in the instance raised by pensionpawn it is the case that the trust is created on death - there is no deprivation (as the individual is dead and thus can no longer benefit from a care home or assistance). It is merely a tax-efficient structure to pass on the wealth. It does not deprive the still-living spouse as it wasn't theirs in the first place.