Life Rent (Scotland)

whatstheplan

A number of years back and as a means of protecting our mothers property (owned outright by her) in a financial sense, our solicitor suggested a Life Rent agreement be entered into with myself and a sibling (transfer of title deeds?) and our mother having a right to life there until her death.  In terms of the property being financially protected from any future care cost calculations/implications, we were advised this would be the case after a 7 year period from the point the Life Rent commenced.  This period of time has now been exceeded.

So, hopefully correctly, we are living under the impression our mothers home, in a legal sense, belongs to myself and my sibling with my mother having a right to live there indefinitely.  And, should our mother ever have to go into care, the property will not be included in any calculations.  Is our assumption correct?  We plan a further meeting with our solicitor to clarify however that won't be until early 2022, so I thought I'd pick the experts brains on here!

Also, to muddy the waters slightly, our mother is quite keen to move.  If this happens, is the property sale and purchase of the new property done in my and my siblings name (due to the Life Rent) or given the property was originally owned by my mother, would the transaction be in her name?

Any advice and clarification would be welcome.

user1977

Didn't you get the previous advice in writing? Seems odd that you only have a vague idea of who owns the property! We can't confirm it to you one way or another without seeing the deeds ourselves. However, it certainly sounds plausible that you've set up a liferent, and (if over 7 years have since passed) the interest passed to you is no longer a potentially exempt transfer for Inheritance Tax purposes.

I doubt deprivation of assets would still be a consideration for something done that long ago. Though bear in mind the value transferred is only your interest - I expect your mum's right to continue occupying the property still has a significant value.

If the property is being sold then you'll all need to be involved.

theoretica

I think you also need to clarify with the solicitor if Capital Gains tax would be due on the property if sold.

Pixie5740

whatstheplan said:

A number of years back and as a means of protecting our mothers property (owned outright by her) in a financial sense, our solicitor suggested a Life Rent agreement be entered into with myself and a sibling (transfer of title deeds?) and our mother having a right to life there until her death.  In terms of the property being financially protected from any future care cost calculations/implications, we were advised this would be the case after a 7 year period from the point the Life Rent commenced.  This period of time has now been exceeded.

So, hopefully correctly, we are living under the impression our mothers home, in a legal sense, belongs to myself and my sibling with my mother having a right to live there indefinitely.  And, should our mother ever have to go into care, the property will not be included in any calculations.  Is our assumption correct?  We plan a further meeting with our solicitor to clarify however that won't be until early 2022, so I thought I'd pick the experts brains on here!

Also, to muddy the waters slightly, our mother is quite keen to move.  If this happens, is the property sale and purchase of the new property done in my and my siblings name (due to the Life Rent) or given the property was originally owned by my mother, would the transaction be in her name?

Any advice and clarification would be welcome.

Does your mother pay rent to you and your sister?  If not then I don't see how the 7 years is relevant because the property would still form part of your mother's estate in terms of inheritance tax.

If you and your sister own the property then you and your sister would have to sell the property (potential CGT) and buy the new property (an extra 4% for the additional dwelling supplement on the LBTT).  The transaction would not be in your mother's name as she no longer owns the property.  The Liferent does not give her the right to dispose of the property.

This little ruse might not even work as there are no time limits on deprivation of capital.

https://www.careinfoscotland.scot/topics/care-homes/paying-care-home-fees/deprivation-of-capital/are-there-any-time-limits-on-deprivation-of-capital/

Nebulous2

I'm no expert - but sounds like 'gift with reservation' might apply here. 

She has given you the house on condition that she can continue living in it. 

theartfullodger

Talk to a Scottish solicitor who specialises in property and family law ..

I.e. not any old solicitor or, fine though this forum of is .......

Suspect initial step would be mum convincing solicitor/whoever that she understands what she's doing and is of sound mind.  Possibly different solicitor to the sibling's solicitor.

whatstheplan

Thanks all.  Tbh our solicitor is a person of few words, hence us requesting the follow-up meeting for clarification around all of this.  I know that my mother received notification x years back when the Life Rent was put in place, but to say it's brief is an understatement.  It contains a one line statement that I can't recall the exact wording of at present.  Other than that we received nothing.

I take on board the advice that it is probably time to seek a solicitor that specialises in property and family law.