Money gift effecting benefits.

Devonuk10

My daughter is married with 3 children and her husband earns £25k pa. They live in a house with no mortgage valued at £230k which is owned by my wife and I. They would like to buy the house from us with a mortgage of £100k with us gifting the difference as a deposit. My question is... How would this scenario effect their “benefits” such as child tax credits, working tax credits etc. They will not physically be given the money as it would pass nominally via a solicitor.
Thanks for you help....

G_M

This is a benefts entitlement question so better to post on the benefits board over here.


Other factors that may be relevant@


* Inheritance Tax. Your gift to them would be included in your Estate were you to die within 7 years
* Deprivation of Assets: Your gift to them would be added to your total assets when asessing your entitlement to benefits, particularly Local authority contributions to Care Home and other Caring costs, should you need them in the future.

Devonuk10

Thanks...
Our estate will comfortably sit within the current IHT allowances and my wife and I are i are in our 50s with, dare I say it, no reason to believe we’ll need any care.
I will pop the question on the other board

lisyloo

Generally equity in a home doesn’t affect benefits.

How on each do you know whether you’ll need care in your 80s or 90s?
It’s a minority that need residential/nursing care but I don’t see anyway you can say with certainly that you won’t.

Whether it’s seen as deliberate deprivation 4 decades later is another matter (I think that would stretch personally) but there is no time limit to roll-back transactions.

I’m looking after my MILs finances and she is having to pay £925 per week for her care !!
So do make sure you are looking after you own interest and won’t end up in an awful local authority care home (which I like to call overmydeadbody grove, having been to some of these places and saying just that)

I was going to say you can get insurance which would eliminate the risk, but I think you are too young for a care needs annuity.

tlc678910

Hi,
If they receive any help from housing benefit then they obviously won't get that anymore. I think the main benefit problem would be if they were out of work then they won't get the housing benefit that would have paid their rent.

Is your daughter an only child? Do you need this money back any time soon or just in general to help with your retirement? I ask because I just put in the mortgage calculator 100,000 over 25 years at 3% and with payments of £474 your daughter would pay back £142,2631.

You could consider a private mortgage where you put a charge against the property in your name for the £100k (like a mortgage lender does) and your daughter pays you back over time. That way if there was a period of unemployment/illness you could suspend payments. You will miss out on interest/investing the money but you could charge slightly more and still undercut the bank. Charge more for the house but don't charge interest else you will start to owe HMRC as income. You would need a solicitor to draw up an agreement and of course to trust your daughter because although your money is protected by a charge in the house it would be difficult and unpleasant to force a sale if she didn't pay. You can also consider what repayment level is realistic and affirdable for them.

Tlc

xylophone

Some people consider giving away their money and property so they can qualify for state support. This is known as deprivation of assets.

There has to have been an intent to avoid care home fees, and given the age of the donors (and presumably that they have other assets/a home of their own), deliberate deprivation would be very difficult to prove?

Since no money will actually be given to the daughter ( no money will pass through her bank account), I can't see how the gifted equity would affect any means tested benefits she might be receiving?

Devonuk10

What a brilliant forum! Lots of food for thought... The ‘deposit’ is definitely a gift so we don’t need it back and the £100k that would come to us would be for us to use for holidays etc. There are no housing benefit issues for my daughter and my son will be catered for in due course.
All very helpful thanks