Basically, Id like to ask a question if I may.
I was thinking about "signing over" my house (or equivalent) to my daughter. Im divorced and live with my daughter. I hope to retire in 5 years time when Im 60. My mum is in a care home, basically she had the house taken off her to pay for the care home fees. (Im worried it may happen to me....hence this post!).
As Im single, (and no intentions of getting married again!) I would obviously rather my house (if Im unfortunate to be taken into a care home, through suffering with Alzheimers) . As the law stands (as far as Im aware anyway!) if one is single, and taken into care basically the house gets sold to pay for the fees. I live in a small terraced house, not even worth £90K I also realise lots of you may not agree with what Im asking....all I want to know...is what is the "best" way...I can ensure at least my daughter will get my house if I get taken into care when Im older! p.m, s, welcome! Thanks.
If you gift her the house and you still live there , you will need to pay her rent at the market rate , otherwise it's considered a gift with reservations and she'll have to pay inheritance tax .
My advice is to go seek professional advice and get it done right .
Originally Posted by MrPoseidon
Thanks for that.
I will take legal advice before doing it........Im just trying to get some idea of timescale involved/when is best time to do it etc. Also I was talking to some guy at work....he said a "mate" of his...wanted to do similar to what I want to do....and he "put it in trust" for her?! Decisions decisions!
I thought inheritance tax was above 250K?
325k
Good point .
It can be done but speak to a solicitor to get it done in the most tax efficient way. When looking for a solicitor make sure they do this type of work a lot so they know what the best way to do it is. You could also try writing to those nice people at the Daily Telegraph. They are quite helpful and can give you a good steer. It might sound daft but you need to protect yourself as well. So you need to make sure you have some rights to live in your house even after you have gifted it. Google for "Tenants in Common" which might be what you are looking for or have a look here http://www.thisismoney.co.uk/money/n...ts-common.html
Many thanks for all the advice guys.....much appreciated.
Sound advice - we obviously don't know your circumstances but if your daughter were to marry for example.
That's one of the "many"! questions I would need to enquire about ....Hmm I will have to sort something out soon....I keep saying....I will do it the next time I have a week off etc!
You need to put the property "in trust" for her.
I`m in the process of this myself, sorting out joint wills, lasting power of attorney, everything in trust. Once the house is in trust for your daughter it cant be sold to pay care home fees. If you sign the house over then you go into care, the local authority can apply a charge against the property, they pay the care fees then recover the money via house sale when you die leaving your daughter with very little.
Search for Estate Planning Solutions, Wilmslow.
Hope this helps. regards Daz.
Most useful tip I've read in ages many thanks.
This can work - and it sounds as if you are taking specialist advice so no doubt they will explain about the potential for the ‘act of deprivation’ issues.
R
Ignorance breeds Fear. Fear breeds Hatred. Hatred breeds Ignorance. Break the chain.
At one stage you had to wait 7 years before the house was protected in the event of care being required. Is this no longer the case?
Unless you are careful you lose all rights to the property yourself. I'm not sure you can become the trustee if you were the owner of the property before the trust is set up. It's a massively complex area and you need very good (exceptionally good in fact) legal advice to get this right. Also not sure if the OP has any inheritance tax issues to worry about given the stated value of the house.
Last edited by aldfort; 2nd April 2015 at 14:00.
If I remember what the advisor told us correctly, the house will belong to the trust, my wife and I will be co-owners and executors of the trust. Our daughter will only "get" the house on our demise, we will add other executors to cover if we both die together.
The trust covers a multitude of options and appears to suit our circumstances, as others have already stated, seek advice from a proper financial advisor.
regards, Daz.
Could be one of the next mis- selling scandals. Deliberate deprivation of assets is becoming a hot topic. It's an area where local authorities have in the past taken different lines of interpretation. As funding for local authorities has shrunk the local authorities are taking much more interest in this, as is the government who want to reduce care home funding.
If you are younger you may get away with it, but those older who are proved to be deliberately using these schemes to avoid paying care home fees may have a problem in the future as well as paying the high costs to the Trust advisors. It's an area that will come under close scrutiny in the next few years.
Last edited by Martin123; 2nd April 2015 at 21:29.
As suggested, get advice from a specialist solicitor – ideally someone who specialises in trust & estate matters. Explain what you want to do and consider their advice before you commit. In theory it is relatively simple to put a property into a trust arrangement under which you give it to someone but carry on living in it for the rest of your life.
If you were to do that, the property will normally pass to them when you die regardless what your will might say (if it were to say something different) – and you would lose access to its asset value if, say, you wanted to mortgage it.
That's not a problem if you're not going to change your mind, but people do – and inheritance litigation is a classic case of the only winners being lawyers. I'm caught up in it at the moment, and I wouldn't recommend it as a pastime – and the cost is eye-watering.
The comments about 'deprivation of assets' make a point – but it's a very complicated issue, hence the need for advice fitting your circumstances.
When choosing a solicitor, pick one you are entirely confident with regardless of their charge out rate. Real experts can work fast and spend less time achieving a better result.
Good luck.
Grandfather and his 2nd wife did this but was set up way before paying for care was an issue. When he died she had a lifetime interest in the house but when she eventually went into care the house was completely out of her estate and when she died it followed the rest of his will and so passed to his family.
This was done to protect his family and the house was written into trust so it is possible, and was I guess doubly effective, as when the trust was set up in the 70s the intention would have been to provide for her after his death but ultimately pass the entire estate onto his family, without any thoughts about care home costs.
So you're intentionally making yourself penniless so as you'll be entitled to claim the cost of being put into care from the state?
No, he is securing for his daughter the house which he has worked and paid for, that he doesn't want stolen from him by the government in the event that he may need state care in the future.
Which would be freely given to his neighbour who never worked and has lived off the state his whole life.
Whats up with that?!
Why the hell should someone who has never saved but enjoyed a nice lifestyle to themselves be entitled to free care?
Have to agree that if the OP has paid his stamp for all of his working life then in my book he's paid for his care in later life in the same way that he's paid for his state pension. Anyway I suggest if this is to be discussed further it moves to BP. G&D is not the place.
Like the NHS it's more akin to an insurance policy.
Use it if you need to but if you don't, don't expect your premiums back.
I suspect that taxes or NI will go up if we expect this to be a universal benefit especially with growing old age population. The argument and counter argument are both valid. It's a debate to be had that we are ignoring as a society.
I don't believe they are.
Person A works from the age of 16-65 paying tax and NI contributions the whole time. They work hard doing overtime (paying more tax) they have a savings account (paying more tax) they buy their own house so they can worry a about one thing less in retirement and have something to pass to their kids. Then they get ill after retirement and have to use their savings and sell their house to pay for their care.
Person B never worked a day in their life, sponging off the state the whole time, no house, no savings. They fall ill after retirement and need care, and the state pays for that too.
Now you tell me, is that a fair system?
it's not a fair system, it;s one of those topics where the arguments make sense on their own but don't join in the middle
we were never designed to live as long as we do, we need care as we get generally only those that die early need no input.
We used to solve this by living with our childrens family, most people partners didn't work, the parents acted as baby sitters and advice. As we spread out and no longer live close and as no one can afford a house bigger for their needs anymore it's less of an option.
The cost of elderly care is so expensive if the country provides it free for everyone, it will bankrupt the country or your children, grandchildren and great grandchildren will have to pay for it in a huge tax bill.
So how is it fair on your children and grandchildren that they should have to pay for your care?
Hence the country is going after the only asset most people have.
When it comes to your family they have a choice, either they look after you in which case they get the house, or the state looks after you in which case the state does. Someone somewhere needs to pay, nobody wants to pay.
I am planning to look after my parents, as far as i am concerned it's the quid pro quo for them looking after me when i was vulnerable, this is nothing to do with their houses, i personally feel i owe them a debt. Most people don't feel this way and are happy to put them into a home.
So the argument works for people who have worked and saved either you pay via your house or your offspring pay via their taxes. The bill can silty be £500 per week, there are very few people who have paid enough tax in their life that can justify getting it free even for a few years.The argument falls apart when you say, what about those who haven't worked and saved and no one can answer that. What do we do with them? not put them in a home?
The system isn't fair, but then you can say that about income tax, you just have to live with the fact that you have a better life so have to pay more
The short answer is the council and the government are going to get very hot at chasing this and those who have tried to hide it may well end up paying anyway
OP personally I'm not sure i would have left a record on the internet saying how you wanted to make the council pay your nursing home fees
I'm not arguing a case for spongers. Taxation is not a savings scheme, it is to fund present day demand and costs, not future (although I think NI is meant to be for our individual future state pension?). I was just stating that there is a debate to be had: self-funding (insurance, savings, asset disposal) or a universal benefit funded by tomorrow's tax payers. I don't have a position and thought the counter-poster raised a valid point. I also understand and empathise with the OP.
Last edited by BillyCasper; 4th April 2015 at 17:42.
"The Council" wont be paying for anybodys care home fees........the people who pay/have paid tax will be paying.
Of course, the fees have to be paid by somebody (taxpayers). Lots of people pay tax.....lots don't.. That's a fact of life. Is it fair? Of course it isn't fair. However in this GREAT Britain of ours, the working class man (of which Im a member), is taxed to buggery and beyond! I know I have to pay taxes....I have no qualms about paying them.......what I hate to see...are generations of families, who believe its their god given right, to live "off the state", from the day they are born until the day they die!
Im not "planning" to get Alzheimers...(believe me..its a terrible disease.............ive had cancer myself.....I would rather have cancer than get alzheimers). So I have no "plans to defraud the council"......! If I get Alzheimers.............I wish I would have the guts to shoot myself.....but I don't think I will have the guts to do that.
What I was asking...is perfectly valid. (believe me many many people with WAY!!!!!!!!!! bigger houses savings pensions etc than me!) have done this and will continue doing this!
IF I was to re.marry? My new wife would be able to live in the house (providing she didn't get alzheimers that is!) so in my humble opinion? By being careful and planning for your own retirement...why should it be "single people" (in the majority) who lose their homes? I know (as Ive said already!) these fees have to be paid for..... Do I have an answer? No!).
As for looking after your own parents with Alzheimers etc? Believe me....in the vast majority of cases....it isn't feasible ! My mum was paying over £600 a week for her care home fees.................When her savings ran out , the house was taken over..........
Something. I think for everybody to think about!
My humble opinion? Any government will have to do something about this soon! I reckon, we are living longer , because of medical treatment getting better and better every year. People can now survive cancer....Im surviving!.....
People can now take medication for heart diseases etc, and so on and so on. I think more people will get alzheimers in the future.....purely because we are living longer due to the medical research on cancer, hearts, strokes etc etc. I simply think people who WILL get alzheimers in the very near future, would have died earlier with heart attacks strokes etc....before all the new medications treatments etc etc.
RANT OVER!
Totally endorse the point about taking professional advice as the following tax points need to be sorted.
Give her the property and pay her rent - She pays tax on the rent (Income Tax) and tax on any increase in value on the house from the date of the gift to the date she finally sells it (Capital Gains Tax as it is not her Principal Private Residence)
Give her the property and pay no rent - still yours for IHT but also still as above for CGT and she is now giving you the rent so income tax for you on the market value rent.
Give it to a trust - very complex tax rules as trusts can be taxed on both income and gains and you may still run foul of the self deprivation rules unless you can show a good reason for putting the property in trust other than avoiding the care costs.
Posting Permissions
Reply With Quote