Transfer house and savings to son

mta999

Asking for a relative (I really am)

My relative in her 70s has sadly been diagnosed with a terminal disease and has been given approximately 12 months to live. She is widowed with one son

She plans to transfer her house and her savings of about 100k to her son (I believe by opening a joint account) within say the next six months. She understands that once it's gone it's gone and if she makes a miraculous recovery she can't get it back but sadly that is unlikely to happen

The reason for doing is purely admin - it would avoid the son having to apply for probate etc after her death. She also understands any taxes, IHT etc would of course still be payable

Are there any downsides to this - I can't think of any

wmb194

https://forums.moneysavingexpert.com/discussion/6674767/transfer-house-and-savings-to-son

“Are there any downsides to this - I can't think of any”

Deliberate deprivation of assets to pay for care.

Silvertabby

Is the son going to live with her and take care of her until the end? Because if she needs to move into a residential care home then, as wmb194 says, this transfer of assets will be ignored when assessing her liability to pay.

RAS

Widowed with one son, so probably has an IHT allowance of up to £1m depending on the value of the house. That's reduced if the house is worth less than £350k.

Probate is so hard to get that many people here DIY and this year some have been granted within a week. It's not like the days of Covid and smaller estates have been exempted from filling IHT forms.

Unless the son lives with her there's potential for what would be a tax free inheritance to end up liable for CGT and he'll have to pay CT and utilities from the date of death rather than being given some grace whilst probate is obtained.

Added to which less than a year can end up being a few months or a few years. One friend who was given months for an aggressive cancer is still knocking back beers locally on Fridays, a decade later. Two friends with the same untreatable diagnosis almost the same month lived two years, mainly in hospital, and over 7 years mainly at home.

Keep_pedalling

Applying for probate is a very simple process so this is a poor excuse for taking such foolish action. If is relatively easy to make her savings easily available to her executors after death simply by making sure they are not held with one institution and keep the amount held below the level that banks and building societies will release without probate. With most that level is £50k. If she has premium bonds or other NS&I savings best to move those out as they can be difficult to deal with if you don’t have probate.

If her estate is at a level that an IHT return is required (anything over £325k unless she is a widow where it could be double that) then the IHT return would still be needed if she made these gifts.

If her son is not already a home owner this will lose him his first time buyer status.

Isthisforreal99

As dumb ideas go, this is right up there. Not clear if son lives in property but transferring for nil consideration could generate a CGT liability for son.

Just make sure will etc in place.

gwynlas

She can have a joint account with son which means that he will be able to draw on it at any time including balance passing to him on death.

Regarding the house as others have already stated it becomes more complicated and you cannot just do what you want.

Ideally they should sey up lasting power of attorneys for both health and wealth and ensure that she's made a will,

Grumpy_chap

Asking for a relative (I really am)

My relative in her 70s has sadly been diagnosed with a terminal disease and has been given approximately 12 months to live. She is widowed with one son

She plans to transfer her house and her savings of about 100k to her son (I believe by opening a joint account) within say the next six months. She understands that once it's gone it's gone and if she makes a miraculous recovery she can't get it back but sadly that is unlikely to happen

The reason for doing is purely admin - it would avoid the son having to apply for probate etc after her death. She also understands any taxes, IHT etc would of course still be payable

Are there any downsides to this - I can't think of any

There are plenty of downsides. So much so it is hard to think of an upside.

What is the reason for this change? If it is to reduce IHT, then is the Estate even likely to be in IHT territory?

If it is for easier admin of matters should she become unable to manage, then LPA would be the solution. LPA better than joint account.

Transferring the house may incur SDLT (there are some exceptions with 'connected persons') and unless the son lives in the house will give rise to a CGT liability. In any event, a gift so close to death will not really reduce IHT. If she still has use of the house, that value will remain fully in her Estate for IHT purposes (as GWR).

Her first priority should be meeting her needs - care and assistance. If she gifts this £100k, does she have plenty of other funds to meet her own needs? She will be deemed under DoA rules to still have the money she gifted so will not reduce liability to fund care. BUT, having the money herself gives her more choice of what care she receives and when. State-provided care will be the minimum amount at the latest opportunity. Her quality of life might be much improved by having funds to get the car she wants when she wants.

The son will not be eligible for any means-tested benefits if that is a consideration.

The son might split from a partner and claim half the money / house.

mta999

I believe a gift of a house ie transferring for zero cost means zero SDLT

Since she is dying she does not need a care home so no deprivation of assets and no need for money for funding

As stated, the reason for doing this is not to avoid IHT but to avoid the need for probate

What use would an LPA be - she is completely compos mentis?

There is unlikely to be any CGT if she transfers 6 months before her death (compared with leaving it in her will)

Agreed if he splits from his partner there may be problems but this would happen even if she left it to him in her will

Pollycat

She might need a care home in the 12 months you said she has left to live.

mta999

Thanks Pollycat I will mention that