buying our parents house

[steviesky96]

My mother is soon to retire and my parents will find it difficult to meet their finacial commitments, If myself and my siblins bought our parents house for them but put it in our four names would it be safe from repossession, my parents would be staying in the house untill they pass away and the house would have been left to the four of us in their will, they owe 10k on their mortgage this is the amount we will be paying is it possible to do this?

[bednobs]

if you pay the mortgage, it will be safe from repossesion

[PrinceRainie]

It will only be safe from repossession so long as the mortgage is paid. It doesnt matter whose name it is in.

Just a though...is your parents overall wealth likely to be over �300,000?

[themas]

The house must be worth a lot more than �10K so in effect it is more or less being given to the 4 of you. If the �10K is used to pay off the mortgage & the transfer is done before any of the unsecured creditors get a charge on the house then it should be safe from those creditors for the time being.

But any of the creditors could make your parents (or one of them) bankrupt, & they would be more likely to do this if they realised the house had been put out of their reach. The effect of bankruptcy could be that the Official Receiver would reverse the transfer to the 4 of you because what your parents have done by making that transfer is dispose of an asset (the house) at less than its real worth and to put that asset beyond the reach of the creditors in order to disadvantage them. The house could then be sold & your parents would have to leave it.

Even if this did not happen there are other risks. If any of the 4 of you became bankrupt the share of the house owned by that person would be an asset in the bankruptcy & the house might have to be sold (& - as above - your parents would have to leave it). Also, if any of the 4 of you was divorced the share in the house would be an asset in the divorce & it might have to be sold.

None of this might happen but, if you go ahead, you need to do so with your eyes open to the possible risks.

[Whickerman]

There may well be tax implications for you too - there's a threshold for gifts (this could well be judged to be just that)

[Stu Dent]

As Themas indicates, the transfer of property purchased well below the expected market valuation is a 'gratuitous alienation'. Creditors could have the sale voided to realise the true market value of your parents home and claim most (if not all) that is owed to them.

This does not arise however if there are no other debts that would make bankruptcy likely. So, if all your parents owe is 10k and you pay that 10k owed for them, then there is no problem.

A problem only arises when you try to make arrangements that prevent creditors from receiving what they are owed.