Pass my property to my adult children in a trust or as a gift?

sheramber

Fi1964 said:

thebullsback said:

Is part of your thinking to avoid Care Home fees? 

I just want my sons to have the house now really.

Why?

There is a lot to consider before doing either.

Such as
Do they live with you?

If not , they will incur Capital GainsTax when it is sold in the future.

If they live with you what happens if one or both want to marry or live with a partner?
Will they want their share of the house to buy somewhere else?

Do they want to be tied to the house or to each other?

RAS

They face

Losing their first time buyer status
Being charge CGT on the uplift in value if they are not resident
Being charged additional SDLT if they buy a house

There will be no advantage when it comes to IHT if you live there.

And if you need care (not just residential), you risk being faced with deprivation of assets. That means that you may need care but the LA refuses to fund it. Fine if you have a tidy stash of savings but not good if you are now relying on your sons to pay for it.

It also means that if you are one of the few who needs residential care, it's Micawber territory rather than somewhere decent. At one stage my parent's social worker wanted me to agree to move them into a home far from family because it was £10 per month cheaper than their home care package. When they had to move 5 years later the home we moved them into cost 5 times as much per month as the one I refused. I suspect it was a whole lot nicer. 

GDB2222

Fi1964 said:

thebullsback said:

Is part of your thinking to avoid Care Home fees? 

I just want my sons to have the house now really.

I think you are confusing us! If you give your house to the children, where would you live?

Angelica123

Do they want the house now? They may be single at the moment, but that will likely change. It's admirable that you want to help set them up but I would say gifting them money would be more useful than gifting a house that they may or may not want especially given the tax implications as mentioned by RAS. 

elsien

GDB2222 said:

Fi1964 said:

thebullsback said:

Is part of your thinking to avoid Care Home fees? 

I just want my sons to have the house now really.

I think you are confusing us! If you give your house to the children, where would you live?

If gifted and you plan to stay in the house, that is a gift with reservation. It’s also means that if either of your sons getting into financial strife –, debt, bankruptcy, divorce - their share of the house may count as an asset that they need to realise. If they are not living there then if they need to claim means tested benefits it could impact on that.

And if you live there and you have a falling out with them (and believe me it does happen), they could throw you out. 
So it comes down to the purpose of what you’re trying to achieve, and if it is your sole property that you are giving up all your security. And the option to move to a more accessible home in the future should you need to do so due to physical health changes. 

https://www.scottbailey.co.uk/news/can-you-avoid-care-home-fees-with-a-lifetime-property-trust

GDB2222

elsien said:

GDB2222 said:

Fi1964 said:

thebullsback said:

Is part of your thinking to avoid Care Home fees? 

I just want my sons to have the house now really.

I think you are confusing us! If you give your house to the children, where would you live?

If gifted and you plan to stay in the house, that is a gift with reservation. It’s also means that if either of your sons getting into financial strife –, debt, bankruptcy, divorce - their share of the house may count as an asset that they need to realise. If they are not living there then if they need to claim means tested benefits it could impact on that.

And if you live there and you have a falling out with them (and believe me it does happen), they could throw you out. 
So it comes down to the purpose of what you’re trying to achieve, and if it is your sole property that you are giving up all your security. And the option to move to a more accessible home in the future should you need to do so due to physical health changes. 

https://www.scottbailey.co.uk/news/can-you-avoid-care-home-fees-with-a-lifetime-property-trust

If the OP continues to live in the house, it also generates a capital gains tax charge for the children if the house goes up in value. 

thegreenone

If the OP gifts the house, would they have to pay rent to the sons?

elsien

No reason why they should? 

GDB2222

elsien said:

No reason why they should? 

If they pay full market rent, it’s not a gift with reservation.

Pollycat

Fi1964 said:

thebullsback said:

Is part of your thinking to avoid Care Home fees? 

I just want my sons to have the house now really.

Why now?

Is part of your thinking to avoid care home fees?