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Thread: Transferring house without sale to child

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  1. #1
    Master
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    Transferring house without sale to child

    I know there are a lot of knowledgeable folk on here so thought I'd ask before approaching a solicitor etc.

    My parents have stated that when they pass they want their family home to be split equally among their children i.e. my siblings and I.

    We, the siblings have all moved out over the last several years and my sister is the only one left in the house along with my parents.

    All siblings who have moved out don't want a share of the house as we are fortunate to be in the positions we are, instead we want the complete house to go to my sister (the one that lives with them).

    My parents are happy for that to happen, and are keen to do it now rather than when they pass.

    This will be a transfer from my parents name into my sister's with no money changing hands.

    The mortgage has been fully paid off about 2 years ago.

    My parents are in their 60s and my sister in her 30s if that makes any difference.

    How do we go about this?




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  2. #2
    Craftsman
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    2 things that spring to mind:

    1) Gift of property to a child is deemed to be @ market value
    2) Assuming your parents are going to continue to live there - gift with reservation of benefit rules will apply

  3. #3
    I advise on these things; or rather I tell the elderly clients (and here your parents are in their 60's so are not old) that I would rather shoot them that advise them to do this

    Daughter falls out with them / gets into financial difficulty / mortgages it without their knowledge / marries & divorces etc etc. Recipe for total disaster. And yes - all these things DO happen

    Doesn't work for IHT purposes

    Am sceptical about care home costs avoidance

    Just tell your parents to gift the house on the 2nd death to their daughter

  4. #4
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    Quote Originally Posted by dandanthewatchman View Post
    I advise on these things; or rather I tell the elderly clients (and here your parents are in their 60's so are not old) that I would rather shoot them that advise them to do this
    Slightly different example, but would this advice still apply to a fully paid off BTL?

  5. #5
    Quote Originally Posted by paulpsz008 View Post
    Slightly different example, but would this advice still apply to a fully paid off BTL?
    that's totally different as it isn't the parents residential home

    Gifting a BTL is similar to gifting cash or your watch collection.

    However there may well be CGT consequences

  6. #6
    Master
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    Quote Originally Posted by dandanthewatchman View Post
    that's totally different as it isn't the parents residential home

    Gifting a BTL is similar to gifting cash or your watch collection.

    However there may well be CGT consequences
    Cheers, this info could be useful.
    Thanks

  7. #7
    Master
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    Quote Originally Posted by paulpsz008 View Post
    Slightly different example, but would this advice still apply to a fully paid off BTL?
    As dandan suggests, you would crystallise a CGT charge (assuming a gain over allowance, etc.).

  8. #8
    Master draftsmann's Avatar
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    Quote Originally Posted by dandanthewatchman View Post
    I advise on these things; or rather I tell the elderly clients (and here your parents are in their 60's so are not old) that I would rather shoot them that advise them to do this

    Daughter falls out with them / gets into financial difficulty / mortgages it without their knowledge / marries & divorces etc etc. Recipe for total disaster. And yes - all these things DO happen

    Doesn't work for IHT purposes

    Am sceptical about care home costs avoidance

    Just tell your parents to gift the house on the 2nd death to their daughter
    I advise on these things too. It’s worth mentioning that a gift of a half share of the family home to an adult child who lives in the home and pays half of the household bills and maintenance costs can be effective for IHT purposes, as I’m sure you knew. But it isn't straightforward and as you rightly say is potentially fraught with pitfalls.

  9. #9
    Quote Originally Posted by draftsmann View Post
    I advise on these things too. It’s worth mentioning that a gift of a half share of the family home to an adult child who lives in the home and pays half of the household bills and maintenance costs can be effective for IHT purposes, as I’m sure you knew. But it isn't straightforward and as you rightly say is potentially fraught with pitfalls.
    Exactly.

    It really is worth taking up with a solicitor - ideally one who is an experienced trust & estate specialist. There are many ways of achieving the result outlined by the OP that could secure the gift as well as protect the parents, each with their own risks and benefits from a practical-legal point of view - and the tax aspects are a further layer of complication on top.

    Getting it wrong is a nightmare of sorting out. Get some good advice from an expert before you start.

  10. #10
    Master valleywatch's Avatar
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    I wanted to "transfer", my house over to my daughter a few years ago.

    I phoned a solicitor...he advised me not to do it? Saying she could get made bankrupt, get married then divorced lose her half of the house to her ex husband etc etc.........

    He didnt want me to do it..I wanted to do it, mainly because...Im divorced, so if I get taken into care , I will lose the house, plus pensions and savings etc to pay for the care. (its happened to my mum).

    I keep meaning to see a financial advisor, to see the best way around it.

    Good luck to you,

  11. #11
    Master
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    Does a 'right of residence' not trump all the possible pit-falls mentioned above?

    My parents transferred their house to my brother and I, and we then granted them both right of residence until their death.

  12. #12
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    Quote Originally Posted by demonloop View Post
    Does a 'right of residence' not trump all the possible pit-falls mentioned above?

    My parents transferred their house to my brother and I, and we then granted them both right of residence until their death.

    An actual lawyer will be along shortly but surely a right to residence is a agreement between party X (the owner of the house) and party Y (the people living in it). I cannot see how Party Z (the people who seize the house) have to honour this if it's seized as part of a bankruptcy?
    Last edited by Alansmithee; 15th May 2018 at 16:59.

  13. #13
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    Quote Originally Posted by Alansmithee View Post
    An actual lawyer will be along shortly but surely a right to residence is a agreement between party X (the owner of the house) and party Y (the people living in it). I cannot see how Party Z (the people who seize the house) have to honour this if it's seized as part of a bankruptcy?
    The right of residence was put in place for this exact scenario (bankruptcy/divorce/etc) and I can’t see the point of it otherwise.

    I’ll be very upset with the solicitor if it doesn’t do as it says on the tin.

    From a quick Google it appears to put a burden on the land, as far as land registry is concerned (the right of residence did have to be registered with LR)
    Last edited by demonloop; 15th May 2018 at 19:39.

  14. #14
    Master Alansmithee's Avatar
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    Quote Originally Posted by demonloop View Post
    The right of residence was put in place for this exact scenario (bankruptcy/divorce/etc) and I can’t see the point of it otherwise.

    I’ll be very upset with the solicitor if it doesn’t do as it says on the tin.

    If your solicitor has told you this would work then I'd take his word for it as he's the qualified person and I'm not. I'm just surprised that if the creditors got a possession order and served an eviction note which are generally worded to cover anyone living there that you'd just be able to stay (for free?).

  15. #15
    Master
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    Quote Originally Posted by valleywatch View Post
    Im divorced, so if I get taken into care , I will lose the house, plus pensions and savings etc to pay for the care. (its happened to my mum).
    If the main motivation for you transferring your house is to avoid future care home costs, they can go back for the house in that event.

  16. #16
    Master valleywatch's Avatar
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    Quote Originally Posted by demonloop View Post
    If the main motivation for you transferring your house is to avoid future care home costs, they can go back for the house in that event.
    Yes..

    Thats what the solicitor said!

  17. #17
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    Legislation has changed a lot on this in recent years. Ask a solicitor and a good tax advisor

  18. #18
    This is something I’m interested in as my parents are divorced but my mother as a new partner,not married and she wants me to have the house .
    Has her partner is younger than her she doesn’t want him to have it as he as his own house anyway.


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  19. #19
    Quote Originally Posted by mk1974 View Post
    This is something I’m interested in as my parents are divorced but my mother as a new partner,not married and she wants me to have the house .
    Has her partner is younger than her she doesn’t want him to have it as he as his own house anyway.


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    cohabiting for more than 2 years ? another minefield

    anyone wanting to take a significant step of transferring what for most people is their main asset should take the right professional advice and not skimp on the cost

  20. #20
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    Quote Originally Posted by mk1974 View Post
    This is something I’m interested in as my parents are divorced but my mother as a new partner,not married and she wants me to have the house .
    Has her partner is younger than her she doesn’t want him to have it as he as his own house anyway.


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    Make a will leaving it to you. There's no need for anything more complex unless the value is above her IHT threshold.

  21. #21
    Would it be possible to simply be added to the mortgage deed and therefore the house will pass to the remaining individuals, named on the mortgage deed, upon the demise of any party - and surely then all named individuals would be required to agree to any change or sale, but of course there may be some potential liability if one became backrupt etc. - not sure if this would work for some scenarios or not.

    I have no real IHT or CGT issues in my jurisdiction at present. Obviously gift with reservation or potential exempt transfer rules and other tax implications might apply depending on where you reside/the parents reside.
    It's just a matter of time...

  22. #22
    I don't know what the law is now but a few years ago I was advised to put everything in a trust to prevent the government claiming it in case of you needing care.

  23. #23
    Master subseastu's Avatar
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    Quote Originally Posted by 200mwaterresistant View Post
    I don't know what the law is now but a few years ago I was advised to put everything in a trust to prevent the government claiming it in case of you needing care.
    My folks did this also though it was a good few years ago and I've no idea if it's possible to do the same these days

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