Parents Transferring/Gifting Home to Children

MeteredOut

TheJP said:

user1977 said:

TheJP said:

user1977 said:

Have you actually seen the solicitor's advice? Can you quote it verbatim, I'd rather hope it was more than just saying it "won't be an issue" as I'm sure anybody here can come up with various potential issues (and you've already mentioned some).

Not seen the advice no, my parents raised these Qs to the solicitor who in whatever way has said this wont be an issue. They did say to my parents that the law on these circumstances are different in NI as they are to England.

Which laws in particular? I don't think there are any different tax implications for a starter.

Again i am going off limited information my parents have passed on to me, they are trusting that the legal advice is sound. I'm not aware what laws the solicitor has referenced when advising my parents.

Ask them if they paid for the advice. If so, they should have it in writing.

badmemory

The one likely to be affected tax wise is the one who currently doesn't own a property who when they come to purchase will be buying a second home not a first.  They should not sell whilst a spouse is living in the property.  Are you convinced they are ever ever going to need care rather than some care at home.  Visit some cheap care homes & see if you would want a parent to have to live in one of those & ask yourself if you would want to visit them there.

bobster2

TheJP said:

My worry is that the solicitor is not being clear on the potential deprivation of assets issue, my parents believe this is restricted to 6 years after you gift the property to your children. However i don't think there is a timeline on this if they continue living in the house.

Any advice or experience on this would be helpful

Cheers

You are correct - there is no time limit on how far back a local authority can look to determine whether there has been deprivation of assets.

sheramber

TheJP said:

LinLui said:

Quite apart from the deliberate deprivation of assets issue, have your siblings thought through this from the possible angle that your parents will end up in a substandard care home if the need arises. Care homes cost money, and there is very definitely a pecking order. If you are dependant on local authority funding then you will be in the lowest standard of home available. That situation is very unlikely to change. "Your legacy" (assuming that you managed to avoid all the other pitfalls) would be at the cost of them being able to access the best quality of care that they could afford when they most need it. I wouldn't have wished to put my parents in that kind of position. Unless, of course, you are all willing to chip in with money to contribute to ensuring they can access care of a quality that affords them a reasonable amount of comfort over and above the most basic provision.

My parents are old school NI, they worked hard and 'paid into the system' and took noting out and don't want their house to be used to pay for care as they feel the state should pay for this, to a degree i see their point. A lifetime smoker/alcoholic/drug user isnt strip of their assets when they need care. We can argue for many pages on this forum why that is right or wrong. I would say myself and my older sibling would have no issues in using our share to pay for the care however my parents would vote otherwise. Thankfully my older sibling will have POA if/when any decisions need to be made.

If the time comes and i am financially able to then yes i would chip in above my share of the property.

And if you are not financially able?

swingaloo

TheJP said:

LinLui said:

Quite apart from the deliberate deprivation of assets issue, have your siblings thought through this from the possible angle that your parents will end up in a substandard care home if the need arises. Care homes cost money, and there is very definitely a pecking order. If you are dependant on local authority funding then you will be in the lowest standard of home available. That situation is very unlikely to change. "Your legacy" (assuming that you managed to avoid all the other pitfalls) would be at the cost of them being able to access the best quality of care that they could afford when they most need it. I wouldn't have wished to put my parents in that kind of position. Unless, of course, you are all willing to chip in with money to contribute to ensuring they can access care of a quality that affords them a reasonable amount of comfort over and above the most basic provision.

My parents are old school NI, they worked hard and 'paid into the system' and took noting out and don't want their house to be used to pay for care as they feel the state should pay for this, to a degree i see their point. A lifetime smoker/alcoholic/drug user isnt strip of their assets when they need care. We can argue for many pages on this forum why that is right or wrong. I would say myself and my older sibling would have no issues in using our share to pay for the care however my parents would vote otherwise. Thankfully my older sibling will have POA if/when any decisions need to be made.

If the time comes and i am financially able to then yes i would chip in above my share of the property.

I have worked hard and paid into the system but now it seems your parents expect me to pay for their care.
  Its not a case of being stripped of your assets to pay for care, its a case of using your assets for a better standard of care. It makes no difference if you are a lifelong smoker or not. 

RAS

Owning a property that is not your main residence could affect any claim to means-tested benefits if valued at over £6k. Are all the siblings confident they won't need to claim any until they reach retirement age (current rules)?

MEM62

TheJP said:

LinLui said:

Quite apart from the deliberate deprivation of assets issue, have your siblings thought through this from the possible angle that your parents will end up in a substandard care home if the need arises. Care homes cost money, and there is very definitely a pecking order. If you are dependant on local authority funding then you will be in the lowest standard of home available. That situation is very unlikely to change. "Your legacy" (assuming that you managed to avoid all the other pitfalls) would be at the cost of them being able to access the best quality of care that they could afford when they most need it. I wouldn't have wished to put my parents in that kind of position. Unless, of course, you are all willing to chip in with money to contribute to ensuring they can access care of a quality that affords them a reasonable amount of comfort over and above the most basic provision.

My parents are old school NI, they worked hard and 'paid into the system' and took noting out and don't want their house to be used to pay for care as they feel the state should pay for this, to a degree i see their point. 

The 'system' that they paid into does not cover this type of care anymore than it covers an annual two-week holiday in Skegness.  Their expectations do not align with what they think they have paid for.,  

TheJP said:

LinLui said:

Quite apart from the deliberate deprivation of assets issue, have your siblings thought through this from the possible angle that your parents will end up in a substandard care home if the need arises. Care homes cost money, and there is very definitely a pecking order. If you are dependant on local authority funding then you will be in the lowest standard of home available. That situation is very unlikely to change. "Your legacy" (assuming that you managed to avoid all the other pitfalls) would be at the cost of them being able to access the best quality of care that they could afford when they most need it. I wouldn't have wished to put my parents in that kind of position. Unless, of course, you are all willing to chip in with money to contribute to ensuring they can access care of a quality that affords them a reasonable amount of comfort over and above the most basic provision.

A lifetime smoker/alcoholic/drug user isnt strip of their assets when they need care. 

Probably because they are unlikely to have any.  The Councils pay on the basis of need, as with other benefits.  We don't all get paid unemployment benefit or disability benefits or any of the other support that the Government provides to those that are in need of and entitled to because it is provided on the basis of need.  It is a support system for those that cannot provide for themselves, not for everyone just because they have 'paid in'.

LinLui said:

Quite apart from the deliberate deprivation of assets issue, have your siblings thought through this from the possible angle that your parents will end up in a substandard care home if the need arises. Care homes cost money, and there is very definitely a pecking order. If you are dependant on local authority funding then you will be in the lowest standard of home available. That situation is very unlikely to change. "Your legacy" (assuming that you managed to avoid all the other pitfalls) would be at the cost of them being able to access the best quality of care that they could afford when they most need it. I wouldn't have wished to put my parents in that kind of position. Unless, of course, you are all willing to chip in with money to contribute to ensuring they can access care of a quality that affords them a reasonable amount of comfort over and above the most basic provision.

I would say myself and my older sibling would have no issues in using our share to pay for the care however my parents would vote otherwise. 

That is nice to know as it means that the rest of us do not need to pay for them.  Let's hope that your view on the subject prevails that your parent's does not.     
      

 

badmemory

Of course it is always possible that you are the one that needs the care home & are having to make a claim on your parents home.  My mother almost 90 was in a care home with 2 under 60s, one of whose dementia was worse than hers.  It happens.

My solicitor, when I was already in my 70s would not let me do shared ownership with my son even though he knew there is no chance of him moving out or getting into any of the other problematic situations.  

Are you sure they were talking to a solicitor & not a will writer.

Brie

The 6 years bit is to do with inheritance tax.  Deprivation of assets has no time limit.

And being broke doesn't necessarily mean you'll be put in the worst care home.  You'll certainly be put in a cheap one but the worst are filled with people who have no friends or family to fight their corner.  MiL who was assigned a home (twice) by the local authority was put in decent places but certainly not the fancy ones we all hope for.  That's because I told them she wasn't to be moved until I had a look at the place.  And living just a few miles away they knew we'd be checking up on things regularly.  And we know there are worse places in our area as OH worked teaching English to foreign care staff and got to visit some right nasty places. 

Other than that it's the effect on the children who get the house.  Divorce, bankruptcy, any FTB benefits or any other benefits come to that might all be an issue.  Maintenance as well can be tricky especially if health is declining and parents aren't up to doing things and reluctant to let others do it for them.   

Grumpy_chap

TheJP said:

Hi all, after some advice/experience on this matter.

My parents (live in NI) own their home mortgage free valued at around £160k. They want to avoid the possibility of paying care fees as they want to leave a legacy to us the 4 children. They have sought legal advice from a solicitor on any implications this could have, they have advised that transferring ownership in 4 equal parts to the children wont be an issue regarding any tax/SDLT and they can live in the house without having to pay any of the 4 children rent.

My other 3 siblings live in NI and i live in England, 3 of us me included own our own properties. My worry was that this could have SDLT second property issues and a worry for the sibling that hasn't bought a house and their FTB status. The solicitor has said this isnt an issue.

My parents on the advice of their solicitor have said this is a gift and wont incur additional taxes etc.

My worry is that the solicitor is not being clear on the potential deprivation of assets issue, my parents believe this is restricted to 6 years after you gift the property to your children. However i don't think there is a timeline on this if they continue living in the house.

Any advice or experience on this would be helpful

Cheers

That advice from the Solicitor seems confusing, or incomplete.  Was it definitely a Solicitor, working on a professional basis (i.e. paid for their services by your parents and with the benefit of PI cover), or a Solicitor friend commenting informally?

IHT is unlikely to be a concern here unless your parents have substantial other assets outside the house.  If IHT were a concern, the gifted house would be GWR (gift with reservation) and make no difference to the IHT liability.

This will be DoA (Deprivation of Assets) and the house will still be considered to be your parents' asset should they require care.  This is not restricted to 7 years - that period only relates to IHT - for DoA the Local Authority can go back as far as they wish.

Some considerations:

1. Once gifted, the children will now accrue a CGT liability when the house is eventually resold once the parents no longer require it.
2. Is this the original family home?  How will the parents downsize in the future if that is what they desire if they have given the home away?
3. The sibling with no house will lose their FTB status and will incur second-property SDLT.
   
4. There are no taxes on gifting the property - the Solicitor is correct on that.  There will also not be any SDLT for the parents in gifting the property.
5. Do the children wish to become landlords?
6. Is there any possibility that any of the children claim, or may in the future need to claim, means-tested benefits?  This £40k part share of a property will be considered an asset any any such claim.  On current rules, that will prohibit access to any means tested benefits.
7. What happens if any of the children pre-decease the parents?
8. What happens if any of the children split with a partner and ex-partner lays claim to a part of the house / force a sale while the parents still wish to life there?

I wonder whether the Solicitor has answered the questions that have been asked of them, albeit in a direct and narrow manner?
If your parents asked "will this incur us in any additional taxes?" then the answer "won't incur additional taxes" seems to be correct so long as the "us" means "your parents".
The broader question that may not have been asked would be "will this incur anyone involved in additional taxes now or in the future based on current taxation rules?"