'buying' the family home

skyblues87

elsien said:

There isn’t a time limit on deliberate deprivation of assets. Wouldn’t be an issue if they stayed put because if a partner is living there then the value is disregarded anyway. 
However if I’m reading it right, they’re planning on giving you the equivalent of 300K. If either of them do end up needing care, and it is foreseeable that at their age needing care in the future is within the realms of possibility, that gift is going to raise some eyebrows if their other assets are not enough to cover it. 

Just in case its coming across differently the aim of this is not to move money around to avoid paying for care but my first thought when they mentioned this idea was that we would need to be sure deprivation of assets wasn't an issue but I'm finding it difficult to find any sort of clear definition as to what counts and what doesn't. 

Where does the line fall between helping your child and deliberately moving money around to avoid paying for care? For example I would assume that if they had £200K in the bank (they don't) and decided to buy me a house as I was struggling to buy on my own wouldn't that be an issue? 

They would still have assets, depending on if they decided to buy or rent they would either have ownership of a property or a nice sum sat in the bank that they were paying rent out of. 

skyblues87

TripleH said:

Op, I assume you do not have any siblings?

If your house is worth less than your parents' there is always the risk of a messy inheritance issue where you argue over shares. (Accept relevant only if you do have siblings).

No siblings to that's not an issue fortunately as it seems complicated enough as it is!

user1977

skyblues87 said:

elsien said:

There isn’t a time limit on deliberate deprivation of assets. Wouldn’t be an issue if they stayed put because if a partner is living there then the value is disregarded anyway. 
However if I’m reading it right, they’re planning on giving you the equivalent of 300K. If either of them do end up needing care, and it is foreseeable that at their age needing care in the future is within the realms of possibility, that gift is going to raise some eyebrows if their other assets are not enough to cover it. 

Where does the line fall between helping your child and deliberately moving money around to avoid paying for care? For example I would assume that if they had £200K in the bank (they don't) and decided to buy me a house as I was struggling to buy on my own wouldn't that be an issue? 

There's no exemption for "helping your child" (at least, not one who's able to stand on their own two feet), it's still a massive gift of assets which they're under no obligation to make.

skyblues87

user1977 said:

There's no exemption for "helping your child" (at least, not one who's able to stand on their own two feet), it's still a massive gift of assets which they're under no obligation to make.

Does that not mean when we read about how nobody can afford to get on the property ladder without a significant amount of help from their parents there's a ticking time bomb as that money will have to be repaid in the future if care is needed?

Obviously need to stick to the rules but do we really have a society where a parent can't assist their child? That seems to me a very different thing to deliberately hiding money in trust funds, accounts in someone else's name or similar. 

Gavin83

skyblues87 said:

elsien said:

There isn’t a time limit on deliberate deprivation of assets. Wouldn’t be an issue if they stayed put because if a partner is living there then the value is disregarded anyway. 
However if I’m reading it right, they’re planning on giving you the equivalent of 300K. If either of them do end up needing care, and it is foreseeable that at their age needing care in the future is within the realms of possibility, that gift is going to raise some eyebrows if their other assets are not enough to cover it. 

Just in case its coming across differently the aim of this is not to move money around to avoid paying for care but my first thought when they mentioned this idea was that we would need to be sure deprivation of assets wasn't an issue but I'm finding it difficult to find any sort of clear definition as to what counts and what doesn't. 

Where does the line fall between helping your child and deliberately moving money around to avoid paying for care? For example I would assume that if they had £200K in the bank (they don't) and decided to buy me a house as I was struggling to buy on my own wouldn't that be an issue? 

They would still have assets, depending on if they decided to buy or rent they would either have ownership of a property or a nice sum sat in the bank that they were paying rent out of. 

Giving your child hundreds of thousands is quite the help and will naturally raise eyebrows. If helping your child was an excuse everyone would do it. A few thousand would be accepted but not the huge sums we’re talking here.

In reality if a fair amount of time passes between the gift and care being required and they have significant assets left after the gift it won’t be a problem.

I’ve seen enough horror cases involving elderly parents transferring their homes to their children that I could never recommend it.

skyblues87

Gavin83 said:

In reality if a fair amount of time passes between the gift and care being required and they have significant assets left after the gift it won’t be a problem.

I’ve seen enough horror cases involving elderly parents transferring their homes to their children that I could never recommend it.

This seems to be the issue really. From everything I've read there's a complete lack of clear definition. There's lots of 'you should be OK if x' type statements. Surely this is something that should be defined as clearly as possible so everyone knows exactly where they stand.

Browntoa

Deprivation of assets could be a concern if " gifted" initially . There's no time limit on that if your council decided to scrutinise finances.

As tenants in common the House is a mandatory disregard for care costs . It's only an issue if the surviving spouse then goes Into care . 

On death the property transfers to the surviving spouse without iht being an issue . What that can do though is push the remaining spouses estate into bigger iht costs.

Who thing needs proper legal and tax advice

user1977

skyblues87 said:

user1977 said:

There's no exemption for "helping your child" (at least, not one who's able to stand on their own two feet), it's still a massive gift of assets which they're under no obligation to make.

Does that not mean when we read about how nobody can afford to get on the property ladder without a significant amount of help from their parents there's a ticking time bomb as that money will have to be repaid in the future if care is needed?

It's generally the case that the "bank of mum & dad" would be paying out (to assist FTB children) decades before mum & dad have to worry about care, so it's not really relevant. Different where it's the "bank of granny" perhaps.

canaldumidi

I'm not an expert in this area by any means, but I suspect 'intent' becomes relevant.

If the intent is to reduce assets so as to reduce inheritance tax or to claim (care or other) benefits, then DofA becomes an issue. After all, if not, every cash-rich person on their deathbed or becoming disabled/needing care etc would simply give their money, yacht and house(s) to their offspring and then live off the state  (ie me!).

Whereas if the intent was to use un-needed money to help young offspring onto the housing ladder, then that's just natural parental assistance

As you say, there is no clear definition of where the line is drawn, as is indeed the case in many legal scenarios - there's a current thread about the definition of 'main residence' where someone buys in area A, but rents & works 5 days a week in area B. Is A a weekend holiday /2nd home, or main residence?

In marginal or unclear cases like these (and many others) we have courts, adjudicators and judges to consider all the precise circumstances and reach a conclusion.......