Deprivation of assets
Hutch100uk
Posts: 605
Forumite
Apologies if this is the wrong section for this.
My parents would like to put their house in my name (and my siblings) in order to protect their assets from being used should they go into a care home.
They have taken legal advice but I'm not convinced its the right advice.
I keep reading about 'deprivation of assets' and would be interested to know how likely this is. In some articles I read that the local authority would be likely to seize the asset anyway if they thought it had been done deliberately. Other articles say that if its done while they are still in perfect health with no immediate need for care, it should be fine.
I'm not 100% sure they should go ahead as I understand there will be tax implications if I was to purchase another home (I rent at the moment). This all seems like a minefield.
Any advice?
My parents would like to put their house in my name (and my siblings) in order to protect their assets from being used should they go into a care home.
They have taken legal advice but I'm not convinced its the right advice.
I keep reading about 'deprivation of assets' and would be interested to know how likely this is. In some articles I read that the local authority would be likely to seize the asset anyway if they thought it had been done deliberately. Other articles say that if its done while they are still in perfect health with no immediate need for care, it should be fine.
I'm not 100% sure they should go ahead as I understand there will be tax implications if I was to purchase another home (I rent at the moment). This all seems like a minefield.
Any advice?
0
Comments
-
Deprivation of assets and care home fees apart, what would happen if you or one of your siblings divorced - and the house had to be sold in order to liquidate the marital assets?
A minefield indeed.
Plus, you do realise what you are asking - you want me to pay for your parent's care homes instead of using their own money?0 -
Silvertabby wrote: »Deprivation of assets and care home fees apart, what would happen if you or one of your siblings divorced - and the house had to be sold in order to liquidate the marital assets?
A minefield indeed.
Plus, you do realise what you are asking - you want me to pay for your parent's care homes instead of using their own money?
I'm not married so that's not an issue. My sibling is though and that has already been raised.
Yes that is exactly what I mean. But then I would also be paying for their care (as a tax payer) and they were also tax payers!0 -
I think your parents would be unwise to take such an action.
You could ask your parent's local authority about how they would view this scenario. That should give you a clearer idea than you would get anywhere else.
You could also try asking a solicitor to guarantee they will make good any future care fees that the local authority claim under such circumstances. I suspect you won't get far though.
Though there are many articles claiming that a local authority could not claim deprivation of assets if the parents were in good health when the property was given away, all of them come with very, very large caveats. Mainly saying that such courses of action are untested in law.
Other concerns:
(i) It does not help with IHT planning.
(ii) You and your siblings may face a CGT liability when your parent's house is eventually sold.
(iii) If any of you or your siblings get divorced, a share of your parent's house will form part of the marital assets.
(iv) If any of you or your siblings hit financial difficulties, your parents house will be counted as an asset.
(v) You may need to pay stamp duty when you acquire your parent's home.
(vi) As you will own a property, you will suffer the enhanced rate of stamp duty should you ever purchase your own home.I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.0 -
HappyHarry wrote: »(ii) You and your siblings may face a CGT liability when your parent's house is eventually sold.
Just on this point, my parents have a house they are looking to leave in their will. If left to the children would CGT still be due? Currently they have a large amount of CGT in the property which is why they are holding on to it.
Is it the same if they left it to grandchildren?0 -
If the property is in both names then they have 2 lots of CGT allowance
But back to the original question , it's definitely deprivation of assets , no limit on how far back that a council can claimI'm a Forum Ambassador and I support the Forum Team on the Shopping and Freebies, Phones and TV and Over 50s boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing . All views are my own and not the official line of MoneySavingExpert.0 -
If it a transaction is done for a justifiable reason and at the time their health suggests no reason why they would need care, then it is not a problem. However, if it is done with the intention to qualify under a means test then it can be included as a deprivation of assets.
It has to be a happy coincidence. For example, if the transaction was justified under tax planning. Then that would be fine. So, unless there is a justifiable alternative reason for doing the transaction, it will be at risk of deprivation of assets.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Just on this point, my parents have a house they are looking to leave in their will. If left to the children would CGT still be due? Currently they have a large amount of CGT in the property which is why they are holding on to it.
Is it the same if they left it to grandchildren?
The CGT built up by your parents will be extinguished on their deaths. Instead, IHT is applied.I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.0 -
Hutch100uk wrote: »My parents would like to put their house in my name (and my siblings) in order to protect their assets from being used should they go into a care home.
Only a small percentage of people end up in care homes.
The average stay is only a couple of years.
While one spouse continues to live in the house, its value is not included in the financial assessment.
If your parents own their home as 'tenants in common', they can leave their share to the children rather than the spouse (with the usual lifetime conditions, etc). That will preserve half of the value of the property.
If your parents do need care and are relying on the council to pay for it, they may not like the places they are put.
I would love to leave our children some money but I'm not going to do it in a way that might mean my last few years are spent in a miserable, poorly-financed care home.0 -
Personally I'd be happy that my parents were in a safe comfortable environment in their old age , my mum has sold her property and is self funding sheltered accommodation near me
You do realise the vast majority of people don't need care at allI'm a Forum Ambassador and I support the Forum Team on the Shopping and Freebies, Phones and TV and Over 50s boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing . All views are my own and not the official line of MoneySavingExpert.0 -
Think they didn't like the answers ?I'm a Forum Ambassador and I support the Forum Team on the Shopping and Freebies, Phones and TV and Over 50s boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing . All views are my own and not the official line of MoneySavingExpert.0
This discussion has been closed.
Categories
- All Categories
- 342.5K Banking & Borrowing
- 249.9K Reduce Debt & Boost Income
- 449.4K Spending & Discounts
- 234.6K Work, Benefits & Business
- 607.1K Mortgages, Homes & Bills
- 172.8K Life & Family
- 247.4K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.8K Discuss & Feedback
- 15.1K Coronavirus Support Boards