Gifting of a house

tcem

Just after some thoughts please.
in 2002 my Nan and grandad transferred their bungalow to my mum, me and my brother and sister. This was done at no value with a declaration of trust.The grandchildren were included in this transfer as my grandparents did not like my mums husband at the time (proved to be good judge of character!)My grandad has since passed and my Nan (coming up to 101) is still living in the bungalow. What would be the implications if we transferred our share of the property to my mum or even back to my Nan?  My mum (75) does not own her own home and would not want to live in the property. When my Nan passes her intention would be for the bungalow to be sold and for my mum to use the money towards buying her own home. 

The bungalow is worth I’d say no more than £200k.
Capital gains tax? Inheritance tax? 

Thanks in advance for any thoughts/suggestions. 

elsien

What was the hoped for purpose in gifting it out in the first place? 

What sort of Trust is it in?

Keep_pedalling

There would likely to be CGT to be paid, based on the gain in value since 2002. In and see the point of doing this, you could simply gift her your share of the proceeds when it is eventually sold.

Keep_pedalling

elsien said:

What was the hoped for purpose in gifting it out in the first place? 

What sort of Trust is it in?

I think declaration of trust just refers to the documentation showing what % each tenant on common owns rather than the property actually being owned by a trust. 

elsien

Ah ok. So the grandchildren have now effectively lost their first time buyer status then? That's a shame. 

Exodi

One must ask what the point of any of this was as the grandparents continued living there - their heirs would have inherited it regardless and IHT doesn't sound relevant. That said, I think I might have an idea why...

elsien said:

Ah ok. So the grandchildren have now effectively lost their first time buyer status then? That's a shame. 

Yep, and even more saddening considering the OP wants to give their share back.

tcem

Thanks for comments I need to get a copy of the declaration. The property was transferred over 20 years ago at which time grandchildren already had own homes. At the time it was done my mum was married to someone who my grandparents didn’t trust they were worried about him and his influence over my mum. Unfortunately it turned out they were right about him!

Exodi

tcem said:

Thanks for comments I need to get a copy of the declaration. The property was transferred over 20 years ago at which time grandchildren already had own homes. At the time it was done my mum was married to someone who my grandparents didn’t trust they were worried about him and his influence over my mum. Unfortunately it turned out they were right about him!

But again, what was the point? If they didn't trust the current spouse of their daughter it would have made more sense to pass down the estate through a will in the future when they pass, instead of instantly giving (in legal terms) an interest in the property that then forms part of a matrimonial estate should they divorce. It makes no sense.

I appreciate you might not know, but the only reason I would guess is the intention to evade possible future care costs (and this comes up all the time on this forum). And so this thread becomes another example of how daft it is.

elsien

tcem said:

Thanks for comments I need to get a copy of the declaration. The property was transferred over 20 years ago at which time grandchildren already had own homes. At the time it was done my mum was married to someone who my grandparents didn’t trust they were worried about him and his influence over my mum. Unfortunately it turned out they were right about him!

Care costs could be consideration moving forwards. Transferring the property back to Nan or your mother means that if either of them do need residential care in the future then the property would be taken into account unless someone else  was living there who would meet the criteria for it to be disregarded. Given your Nan's age and that she is still at home that may well be less of a consideration for her but just to put it on the radar.

Of course you may all want for her to be able to pay for the best quality of care, should it come to it. So again it comes back to the reasons why the transfer is being considered again now. Although your mother's share in the property would already be an asset anyway, albeit one that may be hard to realise. 

Exodi

elsien said:

tcem said:

Thanks for comments I need to get a copy of the declaration. The property was transferred over 20 years ago at which time grandchildren already had own homes. At the time it was done my mum was married to someone who my grandparents didn’t trust they were worried about him and his influence over my mum. Unfortunately it turned out they were right about him!

Care costs could be consideration moving forwards. Transferring the property back to Nan or your mother means that if either of them do need residential care in the future then the property would be taken into account unless someone else  was living there who would meet the criteria for it to be disregarded. Given your Nan's age and that she is still at home that may well be less of a consideration for her but just to put it on the radar.

Of course you may all want for her to be able to pay for the best quality of care, should it come to it. So again it comes back to the reasons why the transfer is being considered again now. Although your mother's share in the property would already be an asset anyway, albeit one that may be hard to realise. 

I'm not to sure, I expect a council may well consider a property transferred with no consideration by a 78 year old who carried on living in the property rent free to be a deliberate deprivation of assets. There is no time limit for this (though it is often confused with the 7 year IHT window), and is measured by several tests which include whether the person anticipated needing care (it would be hard to suggest an elderly person did not anticipate a potential care need), whether paying for care was the reason for giving away assets (and I'm drawing a blank at any other reason to do it) and if they knew they would need to contribute money towards their care (which someone with hundreds of thousands of pounds in assets would).

I'd suggest the that transferring it back would make no difference, as I expect it would be considered regardless. I think people think that the council fell off the last banana boat, but they deal with these sorts of tactics day in and day out. 

elsien

I don't think it would necessarily  be considered as things stand because it was transferred 20 years ago and there is no evidence that it was to avoid care costs. And indeed the lady is still at home so it would seem that there was no imminent suggestion that care would be needed at the time the transfer was made. 
Obviously it is up the a decision maker if it ever comes to it, but the LA would have to prove the intention and I think they may be on difficult grounds in doing that.