Countrywide Tax and Trust

Jennywren3

This company from i can understand  has  told my friend if she signs her home over to a son or daughter with their plan, Her Son/ Daughter will not have to cover her care bills if she had to go into a Care Home or pay inheritance even if it happens before 7 years is out 
They want money to draft this out 
Is this a legal scheme or scam 

Keep_pedalling

Putting your home in trust is not illegal, but it a pretty stupid thing to do. I would class this as a scam because they have not been given the full facts because this bunch of sharks what’s to be able to charge them a nice fat fee for doing something that could backfire horribly. 

1. Unless they are also happy to pay their children full market rent then this does not avoid IHT as this is gift with reservation of benefit so the 7 year rule does not apply.

2. This would be classed as deliberate deprivation of assets in any financial assessment for residential care costs. 

3. If their children do not already own his own home this will lose him his first time buyers status and will cost him an extra 5% tax if he does buy one.

4. Their long term security is under threat if their son gets divorced, gets into financial difficulty, dies before they do or simply has a falling out with them.

5. When the home is sold at some point in the future (perhaps to downsize) their children will have a CGT liability 

6. Putting the house in just one of the children’s names is risking a major sibling rift after they have died.

What they should be doing is seeing a local solicitor with regard to drafting up wills. Their wills could drafter to create an immediate post death interest trust on the first death that would prevent half the house value going on care costs for the surviving spouse or being lost if the surviving spouse remarries and fails to make a new will. Doing this avoids all of the above issues.

They should also be putting lasting powers of attorney in place if they don’t already have them. 

Jeremy535897

I have to agree. It is not an advisable thing to do. I think it will be somewhat more complex than signing over the home, because, as pointed out, unless a full rent is paid, the house remains in friend's estate. Also, the suggestion that the seven year rule won't apply suggests a complex scheme involving sales and loans designed to get round anti-avoidance legislation.
For the benefit of others reading this as well, I would note that councils cannot simply set aside any gift by an elderly person if subsequently they have to go into a care home. Age UK offer advice on this:

"What counts as deprivation of assets?

When your council is deciding whether getting rid of property and money has been a deliberate deprivation of assets, they will consider a few things:

1. If you knew you would need care and support at the time you gave away your assets.
2. If paying for care and support was a significant reason for you giving away your assets.
3. If you knew you would need to contribute money towards your care.

It’s not just giving away your money that could be seen as a deliberate deprivation of assets. Different ways of reducing your money or property could count too, including:

• giving away a lump sum of money, for example as a gift
• suddenly spending a lot of money in a way which is unusual compared to your normal spending
• suddenly spending lots of money on living in an extravagant way, such as gambling
• transferring the title deeds of your property to someone else
• using savings to buy possessions, such as jewellery or a car, which would be excluded from the financial assessment
• using your assets to buy an investment bond with life insurance
• putting your assets into a trust that they can't be removed from.

If the local council thinks that you have deliberately reduced your assets to avoid care fees, they may still include the value of the assets you no longer have when they do the financial assessment.

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What if I gave my money or home away a long time ago?

The timing is important. The council will look at when you reduced your assets and see if, at the time, you could reasonably expect that you would need care and support. They then have to decide based on all the case facts and clear reasons, which could be challenged.

If you were fit and healthy, and couldn't have imagined needing care and support at the time, then it might not count as deprivation of assets."

https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/deprivation-of-assets/

Jennywren3

Thanks so much Brilliant answers Made things really clear