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Transfer property into children's names

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My father in law is looking to transfer a small number of properties that he owns into the names of my wife and her 2 sisters, as an additional part of granting them power of attorney in his later years.  1 of the [properties is the family home where he still lives, but the other 4 are properties that are let out to tenants.  I have my concerns about liabilities that could arise out of this - I'm not sure how good shape the places are in!  Does anyone have any experience of anything like this - what are are the pitfalls and things to consider??
Thanks

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  • edited 31 May at 10:43AM
    FarwayFarway Forumite
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    edited 31 May at 10:43AM
    It may not be the case here, but if FIL is thinking this move will save Capital Gains or Care home fees he is wrong
    I do think this move really needs professional solicitors advice, as you intimate you will become a landlord in one stroke with maybe expensive repairs ahead
  • unforeseenunforeseen Forumite
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    Do your wife and her sisters want to be landlords with all the responsibilities that go with the role? 
  • jonnypetrovskijonnypetrovski Forumite
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    I think my father in law would still manage the properties and draw the income for him to live off, but I guess I'm just worried as to what is in place to protect us if something happens - I know that we'd need to ensure that the relevant insurances are in place and that we aren't liable for upkeep etc at the moment
  • FarwayFarway Forumite
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    I think my father in law would still manage the properties and draw the income for him to live off, but I guess I'm just worried as to what is in place to protect us if something happens - I know that we'd need to ensure that the relevant insurances are in place and that we aren't liable for upkeep etc at the moment
    Isn't there something in tax law about transferring assets but keeping the income & control of them, not allowed AFAIK
    Once transferred to someone else it is theirs to do with as they please, including selling it
  • p00hsticksp00hsticks Forumite
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    I think my father in law would still manage the properties and draw the income for him to live off, but I guess I'm just worried as to what is in place to protect us if something happens - I know that we'd need to ensure that the relevant insurances are in place and that we aren't liable for upkeep etc at the moment
    What is his motivation for doing it then ?
    If he's going to still take the income then it's a gift with reservation of benefit so still within his estate for IHT purposes, it could be seen as a deprivation of benefits if he's trying to avoid future care home fees, he may well have to pay CGT as part of the transfer and it appears to be handing over the responsibility and liability to your wife and siblings whilst giving them no/few immediate benefits and a few possible downsides (e.g limiting the ability to claim means tested benefits, being taken an asset in the case of any divorce or bankruptcy issues) 
    As Farway says I think both you and he need to be consulting a good solicitor to discuss the pros and cons.

  • pigletsmumpigletsmum Forumite
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    May I also point out that if you are the owner and the tenant has recourse, because of problems encountered with the property or the tenancy then you can be held liable. 
  • Keep_pedallingKeep_pedalling Forumite
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    Sorry to be blunt but you FIL is being an idiot. If this is being done to avoid IHT then it won’t work because if he is still receiving the revenue from the rental properties and he is still going to live in his home then HMRC will regard them as gifts with reservation so will not drop out of his estate after 7 years. In addition he is liable to have a significant capital gains liability to pay when he transfers ownership on the rental properties.

    if this is to avoid care costs then again it won’t work as this would be classed as deliberate deprivation of assets.

    there are plenty of other reasons this is a terrible idea, but if he is still considering giving his properties away don’t let him do it without taking independent financial advice.
  • BrowntoaBrowntoa Forumite, Board Guide
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    It's definitely deprivation of assets 

    It's a complex situation that needs specialist advice and drawing up carefully
    Links in my signature currently broken
    I'm the Board Guide of the Referrers ,Telephones, Pensions , Shop Don't drop ,over 50's , Boost your income and Discount Code boards which means I volunteer to help get your forum questions answered and keep the forum runnning smoothly .However, please remember, board guides don't read every post. If you spot an inappropriate or illegal post please report it to [email protected] Any views are mine and not the official line of MoneySavingExpert.
  • crv1963crv1963 Forumite
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    In addition to the flaws already mentioned your wife and her sisters may become liable to pay tax on any rental income depending on their circumstances and the sums involved.
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
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