Signing over a house?

[StretchyLegs]

My mother, now a widow (82) wants to sign over the family home to my brother and myself, as she wants to avoid losing it all if she has to go into care in later years. I know there is something about an eight year period, but any first hand experiences or advice on the best way to go about this would be gratefully received.
Many Thanks

[dzug]

There are two aspects here:

In assessing care fees the Council may regard the signing over of the house as deliberate deprivation of assets to avoid care fees and may assess the fees as if she still owned it. I don't think the number of years for which they can do this is well defined - it's certainly many.

The other aspect is that if she dies within 7 years of making the gift. then the value of the house is counted in her estate for Inheritance tax purposes.

There are more complications than this - I'd seek expert advice.

[Nether Edge]

dzug's third paragraph: only a proportion of house's value is counted. The Transfer is "potentially exempt" for inheritance tax.
None of value is counted if donor (=mother) survives 7 yrs from gift.
For each year after gift, part of value is discounted- not sure if equally each year or sliding scale: 100% at first down to 0% after seven years.

[dzug]

The sliding scale that Nether Edge describes kicks in after 3 years and is actually a reduction in the tax payable rather than a reduction in the value of the gift - OK comes to roughly the same thing.

And (the big gotcha) is that the sliding scale ONLY comes into effect if all gifts made 3-7 years prior to death total more than the IHT threshold at the time of death.

http://www.hmrc.gov.uk/cto/customerguide/page1 3-1.htm

The other potential trap is that if she continues to live in the house she must pay you and your brother a commercial rent. Otherwise it's a gift with reservation and the Revenue will regard her as still being (at least part) owner.

As I said first time round there are loads of complications - I'm sure not all mentioned - so it's essential to seek expert advice