Giving a child a lump sum?

carolskianne

Hello
I'm new here but would appreciate some advice please?
We are thinking of moving in with our son and daughter in law They are about to buy a large house and let us live free in the flat downstairs..(my husband has MS) so it will be helpful for us and for them re imput with babysitting etc. My question is; we want to give then our rent in advance for life really say about £100,000, does this have any tax implications for either party or can we give it as a gift?

EdInvestor

carolskianne wrote: »

My question is; we want to give then our rent in advance for life really say about £100,000, does this have any tax implications for either party or can we give it as a gift?

You'd be better to ask on the tax board about the implications of this, which are quite complicated.

http://forums.moneysavingexpert.com/forumdisplay.html?s=&daysprune=&f=22

As to the wisdom of it, will this leave you without resources?What if something went wrong (relationships can break down) and your son was divorced, meaning the house had to be sold? Or either he or his wife were made bankrupt, ditto?

You could be left without accommodation and without the "rent" money to pay for a replacement.

carolskianne

Well. I thought that as we were giving it as one off payment towards his rather large mortgage that we were 'allowed' to do this as long as we live for 7 years! We do plan to! As to the wisdom of it...whereas I appreciate your concerns..we have thought it through between us all and have looked at all those possibilties..they may happen, but we doubt it and at the end of the day if you worried about every 'what if' you would never take calculated risks. There also does seem to be a return to families pooling recourses more and more now which I can only ever see as a win win as long as you communicate well and afford each other space..

Andy_L

carolskianne wrote: »

let us live free in the flat ...... we want to give then our rent in advance for life really say about £100,000, does this have any tax implications for either party or can we give it as a gift?

Either the £100k is rent - in which case it's liable to income tax as some form of rental income, or you are living there rent free & the £100k is a gift which, if you don't live for 7+ years will still count as part of the estate for IHT.

egamar

carolskianne wrote: »

Hello
I'm new here but would appreciate some advice please?

My advice is get professional advice. You will have to pay for it, but with the sums of money you are talking about and the contractual, tax, familial and legal implications over a fairly long time-frame, I really think you should involve a 3rd party.

Such dealings between family members can cause an awful lot of trouble if they are done "in house". The professionals will ensure that every knows what the deal is, there are no misunderstandings, (so tragically common in family dealings like this) and everything is done with the best tax implications as well as protecting everyone's interests - yours especially.

Now, as to what sort of professional .... crikey. A solicitor probably (who might consult an accountant and an IFA and mark-up their fees horribly presenting you with a hideous bill plus VAT. But even a couple of grand (an overestimate, I think) would be worth it for peace of mind.

Someone must have better suggestion about who to consult, but consult you must, I suggest.

carolskianne

Andy L has said exactly what we thought, that it was fine as long as we dont die for7 years...Egamar's response was comprehensive but I feel at the end of the day its about trust and we do trust our Son ( some may say wrong!!!) but hey ho..we just do.

seven-day-weekend

I understand where you are coming from. We too have a son who at some point in the future we may give a large sum of money to, and we too trust him not to 'swindle' us at a later date.

But I still think it is worth taking legal advice as some things will be out of his control. What, for example, if your son divorces? Unfortunately these things happen and can't always be forseen. His ex-wife would be entitled to half. Where would that leave you? Would he have to sell to give her her share? Or what if illness or redundancy struck and he has to downsize, because he can't afford the mortgage? What would be your position then?

Don't think it can never happen. It can, and does. It's a matter of being sensible and looking after your interests, not about not trusting your son.

Therefore, I think you should take professional advice, we will, if/when we decide to help our son out.

egamar

carolskianne wrote: »

Andy L has said exactly what we thought, that it was fine as long as we dont die for7 years...Egamar's response was comprehensive but I feel at the end of the day its about trust and we do trust our Son ( some may say wrong!!!) but hey ho..we just do.

Now, I would not dream of impugning Andy L - but he doesn't appear to claim to be an expert, he's not getting paid for his advice and you have no recoruse4 if you follow his advice.

I appreciate he confirms your own thoughts, but - and please don't think I'm being rude - if you were experts you wouldn't be asking for advice in here.

I am not an expert either - except in one field -- recognising when it IS necessary to consult an expert! I shan't bang-on about it any more, except to say that I trust my mum, she trusts me and my siblings and I trust them. We all sleep more comfortably in our beds knowing that all our mutual financial dealings are supervised and governed by the professionals, and when something untoward happens (divorce, death other life crises) we involve the professionals in supporting that family member financially if appropriate.

But anyway, 'nuff said on my part. Hope it all works out for you.

carolskianne

Understand exactly what you're saying and I DO appreciate it..thanks..however, we have few choices and we have to make this one and for the most part are thrilled to have this opportunity. If it goes pear shaped in the future well, we'll worry about it then. My OH has MS and I suppose we'll have to throw ourselves on the mercy of the good old UK government...this way though we have some form of independance and when you have lived with disability for 26 years..you cherish it! Both our son and daughter in law have had painful things to deal with in their lives for ones so young and I do beclieve that it has given them a much less selfish outlook to life and they are very strong and mature for ones still comparitively young.

Andy_L

egamar wrote: »

Now, I would not dream of impugning Andy L - but he doesn't appear to claim to be an expert,

Definitely not (In this field anyway )

Like it says up top "Anyone can post so always exercise caution when acting on info."

egamar

Andy_L wrote: »

Definitely not (In this field anyway )

Like it says up top "Anyone can post so always exercise caution when acting on info."

I don't know about you, but I worry any time someone says they're going to follow my advice!