giving away money/property before death

EdInvestor

sdooley wrote: »

and if the trust is a bare trust could call for the property to be sold to them.

AFAIK this is not the kind of trust we are talking about here.

Also, trusts established in contemplation of care home fees being due can be ignored by local authorities when assessing the fees.

This would not however make any difference if the house was owned as tenants in common - it's the TIC ownership that stops the LA, not the trust.The trust is designed to protect the survivor from issues relating to the eventual beneficiaries (eg bankruptcy, divorce) and to protect the child from a CGT bill on eventual sale.

It is somewhat alarming the number of stories you hear about people receiving poor legal advice in this area..

treliac

This would not however make any difference if the house was owned as tenants in common - it's the TIC ownership that stops the LA, not the trust.The trust is designed to protect the survivor from issues relating to the eventual beneficiaries (eg bankruptcy, divorce) and to protect the child from a CGT bill on eventual sale.

Establishing a protective trust and creating tenants in common ownership for a husband and wife is a different and a worthwhile approach to safeguarding the property, which is already jointly owned by the couple anyway. The TIC just re-arranges the way they own it, i.e. transferring to legal ownership of half each, which will protect their financial interests in the event of them needing paid care.

Each of them can then will their half to their children or whoever they wish in the usual way, no trust involved. The aforementioned issues arise when a parent wants to put their property into trust for their children.

EdInvestor

treliac wrote: »

Establishing a protective trust and creating tenants in common ownership for a husband and wife is a different and a worthwhile approach to safeguarding the property, which is already jointly owned by the couple anyway. The TIC just re-arranges the way they own it, i.e. transferring to legal ownership of half each, which will protect their financial interests in the event of them needing paid care.

Quite so

Each of them can then will their half to their children or whoever they wish in the usual way, no trust involved.

If they do this, then the surviving parent is exposed to potential problems mentioned above involving divorce bankruptcy etc, which could lead to him/her being forced to leave and sell the property.

Hence the trust idea, which avoids this exposure.

treliac

EdInvestor wrote: »

If they do this, then the surviving parent is exposed to potential problems mentioned above involving divorce bankruptcy etc, which could lead to him/her being forced to leave and sell the property.

Hence the trust idea, which avoids this exposure.

Mmm ........... cue legal advice?

The establishment of protective trust / tenants in common is useful for married partners. How would they build the children's interests into this equation at the outset, whilst maintaining the protection and security of the remaining partner?

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sdooley

Any detrimental transaction, even where the legal title is transferred over to the children to be held as tenants in common, can be taken into account by the Local Authority in setting fees if it was entered into in contemplation of passing the burden of care home fees to the State.

It is true that this is very difficult to enforce but one imagines swathes of advisors smiling and nodding while elderly folk sign away their major asset saying 'it's nothing to do with care home fees, honest guv'.

margaretclare

I agree with Primrose and loulou41 above, and I have been very much criticised for saying this but....if full-time residential care ever becomes necessary (and it may not!) then it has to be paid for somehow, by somebody.

Did your parents do all that 'hard saving' just forthe purpose of passing it all on? Or did they, as so many people have done and still do, save for a 'rainy day' i.e. some unpleasant or detrimental change of circumstances in which money could make a big difference in terms of extra choice and comfort?

It's also possibly worth spending money on modernising their home to make it more easy-care, more convenient, or even thinking of downsizing to a house without stairs etc. These kind of measures may make going into full-time residential care less likely.

We've spent the last few years modernising a 1930s bungalow, we're still saving, not to pass it on but because we don't know what our needs may be in time to come, and we do give to the younger ones even if it's in relatively small ways, it's what they need at the time.