Placing house in a trust

GunJack

pensionpawn said:

xylophone said:

"Seven years" has nothing to do with "wilful deprivation of assets in order to obtain or increase a means tested benefit".

See https://www.carehome.co.uk/advice/deprivation-of-assets-to-avoid-paying-for-care-home-fees

The "seven year rule" relates to the length of time that has elapsed since a gift was made in order to have it qualify to be an exempt (from IHT) transfer.

This is true and is a common misconception. It took me ages to get this across to a well educated family member who's wife used to run a care home (so I thought they would have known).

However what can be done is to change the ownership of the house (if necessary) so that when the first parent dies their personal financial interest (share) in the family home passes, in trust, directly to the surviving children. Therefore if the surviving parent eventually incurs care home fees only 50% of the value of the family home is liable as they did not own the whole house on death of their husband / wife. The surviving parent can not be evicted from their home by any of the children.

We personally see this as the optimal solution as some (most) care home costs are being met by the family and at least 50% of the family's hard earned wealth can be passed on.

there is a down side to this approach - second home Council Tax and if you (as the child owner of half the house), need to move house yourself, are then liable for the additional buying fees associated with a second property.

This is why I need to move to my last house before anything happens to either of my parents (upper 70's but still doing very well)... I hope I manage it in time...

xylophone

there is a down side to this approach - second home Council Tax and if you (as the child owner of half the house), 

 Pension Pawn pointed out that the house would be left in trust to  the surviving children (ie, the children would be the "remaindermen" of an Immediate Post Death Interest in Possession Trust).

The parents would have been tenants in common.

The deceased would have left his spouse an "Interest in possession" - this means that the remainder men have no interest in the property until the IPDI ends.

Therefore there is no question of their paying council tax or  being liable for extra stamp duty if they move house.

https://www.thewillbureau.co.uk/news/2018/6/29/what-is-an-immediate-post-death-interest

sevenhills

pensionpawn said:

This is true and is a common misconception. It took me ages to get this across to a well educated family member who's wife used to run a care home (so I thought they would have known).

So educate people, if there isn't a 7 year rule, if I gift my house to my children 20 years before death. Would that be ok, maybe 10 years would be ok too?

maisie_cat

sevenhills said:

pensionpawn said:

This is true and is a common misconception. It took me ages to get this across to a well educated family member who's wife used to run a care home (so I thought they would have known).

So educate people, if there isn't a 7 year rule, if I gift my house to my children 20 years before death. Would that be ok, maybe 10 years would be ok too?

what happens if one of your children gets divorced or goes bankrupt? you'll be homeless

p00hsticks

sevenhills said:

pensionpawn said:

This is true and is a common misconception. It took me ages to get this across to a well educated family member who's wife used to run a care home (so I thought they would have known).

So educate people, if there isn't a 7 year rule, if I gift my house to my children 20 years before death. Would that be ok, maybe 10 years would be ok too?

As I understand it there is no fixed timescale, it will depend on both your state of health at the time and the reason for you making the change. If it appears that you have made the change purely  in order to try to avoid paying future care home fees (and I think most people would struggle to come with any other sensible reason. given the many potential downsides to making such a change, with very few advantages, if any) then it doesn't matter how long ago you did it.

pensionpawn

sevenhills said:

pensionpawn said:

This is true and is a common misconception. It took me ages to get this across to a well educated family member who's wife used to run a care home (so I thought they would have known).

So educate people, if there isn't a 7 year rule, if I gift my house to my children 20 years before death. Would that be ok, maybe 10 years would be ok too?

I did!
There is no time limit however the council have to prove beyond doubt that you took the action you did solely to 'deprive assets' against care home costs. So, if you gifted money to put family through university, provide a deposit for a house etc that would not be considered as deprivation of assets as they have a ubiquitous purpose. 

sevenhills

pensionpawn said:

I did!
There is no time limit however the council have to prove beyond doubt that you took the action you did solely to 'deprive assets' against care home costs. So, if you gifted money to put family through university, provide a deposit for a house etc that would not be considered as deprivation of assets as they have a ubiquitous purpose. 

So you are living in your sons/daughters house, just tell them your son/daughter is looking after mum/dad, why would anyone have the right to even know what happened?

They would go back 20 years, a ridiculous statement.

OldBeanz

"There is no time limit to deprivation of assets, meaning any past disposal of assets could be considered. However, the local authority must provide evidence of motive and consider if the amount made any substantial difference to the capital limit, i.e. £23,250 in England.8 Sept 2020"

justwhat

matt_outandabout said:

Can I ask what the difference is between hiding your wealth to claim state aid in old age and hiding your wealth to make a claim for state aid through the benefits system?
Morally this doesn't sit with me at all.

As in its (possibly) breaking the law or it should not be means tested? Why penalize a person that saves over a person that could save but chooses not too?

Emmia

maisie_cat said:

sevenhills said:

pensionpawn said:

This is true and is a common misconception. It took me ages to get this across to a well educated family member who's wife used to run a care home (so I thought they would have known).

So educate people, if there isn't a 7 year rule, if I gift my house to my children 20 years before death. Would that be ok, maybe 10 years would be ok too?

what happens if one of your children gets divorced or goes bankrupt? you'll be homeless

What if you (seriously) fall out with your child, and they sell the house / evict you???