Giving House Away

dodbarn

My mother in law is planning to move house soon, she is 75 and wants to put the new house into my wife’s name in part to simplify things when she died and also because she wants to leave the property to her 4 children and to me.

I own a 20% share of the property as I gave her some money to help buy her current house a number of years ago. None of this is official she just changed her will to make me a 5th benefactor along with her 4 children so it worked out fairly well.

She is now concerned that if she needed care later on, she would be forced to sell the house which is worth about £110k and use the proceeds of that to pay for it. She is firstly concerned that I will not get back my share of the capital that I put in and secondly that she will not be able to leave anything to her children.

It's all very hypothetical at the moment but would it be possible to put the house in my wife’s name or are there other legalities with this?

Thanks

Bossyboots

There are loads of threads relating to this sort of thing. If you search for Inheritance Tax on the boards, you should find some answers now rather than waiting to the experts to appear.

I will put down what I can remember though to help you out in the meantime.

1) If she just transfers part of the property to your wife, it will still be subject to Inheritance Tax (if the estate is big enough, which it won't be if this is her only asset) if MIL dies within seven years.

2) I think the "gift" is taxable anyway if MIL dies within 7 years but on a sliding scale. If I have got it right, this is a personal tax on your wife, not the estate.

2) You cannot dispose of you assets to avoid care costs. I will see if I can find you a thread on this subject.

3) Your 20% is not safe. There is nothing stopping her changing her will at any point and leaving you out. Had you done it properly at the time and actually bought 20% of the property, your money would have been safe. It would also have diminished the amount of equity she had available and I think protected the house against sale (although that might only apply if you live in it).

As I say, hopefully some experts will be along to tidy up the position for you.


http://forums.moneysavingexpert.com/showthread.html?t=31348&highlight=sell+care+costs

irnbru_2

dodbarn wrote:

She is now concerned that if she needed care later on, she would be forced to sell the house which is worth about £110k and use the proceeds of that to pay for it. She is firstly concerned that I will not get back my share of the capital that I put in and secondly that she will not be able to leave anything to her children.

Is it possible for her to buy the new house and return your 20% stake?

TBH you don't want to be in the position of being a benefactor in a will sharing a fixed asset with 4 others. She should consider that the house be disposed of first and then the estate dispersed amongst her benefactors - it will save you a lot of hassle in the end.

dodbarn wrote:

It's all very hypothetical at the moment but would it be possible to put the house in my wife’s name or are there other legalities with this?

Yes! Someone far more knowledgable will explain but it'll be seen as an avoidance mechanism.

The Age Concern websites have information packs which detail all the ins-and-outs of paying for care and a lot more besides (including wills).