Giving The House To The Children

[grandpajoe]

What are the implications of "giving" the house to our three children and carrying on living in it?? Has anyone done this?? Cheers Chris

[fiction-factory]

Could be lots of complications. What is it you hope to achieve?- there may be a better way to achieve the same outcome

[grandpajoe]

We want to avoid the government using the house as proceeds towards any future care needs. We've paid enough into the system.

[mikey4444]

In order for this to succeed ( and not incur IHT ) You will have to pay a market rent for the property ( most certainly not a pepper-corn rent, and your kids will evidence of this, like a Rent Book), and/or survive for 7 years.

If it were that easy, everybody would be doing it !

[woofgang]

Its called “deprivation of assets” and it doesn’t often work
http://www.ageuk.org.uk/home-and-care/care-homes/deprivation-of-assets-in-the-means-test-for-care-home-provision/

[Islay]

Just out of interest do you think you have paid enough into the NHS to cover the cost of constant care for perhaps 10 years in a care home? Anyway in order for HMRC not to chase you down for avoidance you will need to get legal advice.

[EDDIE51]

You really do need expert advice as local authorities now have the power to look back many years to make sure you HAVE NOT done what you are planning to do. They know all the 'tricks' and 'dodges' to get out of having to pay care fees. Care fees can go to £2000 a day and more in some cases where direct 1 to 1,. 24/7/365 care is needed.
My brother is a senior housing finance officer for a large London authority and he tells me they can go back a lot further than the 7 years people often quote.

[ubasses]

According to the book of information I was given when Mum went into a Care Home they can go back as far as 20 years. Also putting the house into a Trust is now viewed the same way as giving it away when it comes to assessment.

[EDDIE51]

They do not 'take the house' to pay care fees. What normally happens now is that a 'charge' or 'interest' will recorded against the house so when it is sold ( by the children after the death of the owner for example) the charge has to be repaid before the cash from the sale is divided up to the beneficiaries. My brother did mention that his council had looked back 15 years to claim care fees against a house in some cases.

[Peter Pedant]

Divebuddy has a rather old view of trusts and what they can do ( 60s and 70s)

Rules changed in March 1986 I think

it is vitally important that you avoid 'interest in possession' or ( same thing) retained benefit
as your plan A would do

and putting it ia trust and staying in it would as well

On your death it woul d be counted as part of your estate for IHT and also involve CGT for your kids on sale dating from the date of transfer

it is vitally important you take tax advice on this
( not really from us)

doing it badly ( so that there an interest in possession ) and then reversing everything makes the tax man really rub his piggy little hands - as one does not cancel out the tax in the other but now there are two transactions and transfers to tax ! yum yum says mr taxman

[woofgang]

there is also the disinvestment aspect which the OP has fessed up to....

[Peter Pedant]

feast your eyes on this !

http://www.tolleytaxtutor.co.uk/taxtutor/files/subscriber/personal-tax/uk-trusts-and-estates/lectures/1d12.pdf

I would call it a good read
but not many others would
it even has my fave tax case - Pearson v IRC

[Peter Pedant]

um er DB so long as he gets the idea that his idea is bad and the ideas from Ab posters are pretty terrible

he would be making an expensive mistake
and instead of taking advice from us
should take advice from um someone who knows what he is talking about
( tax consultant = money in fees )

[EDDIE51]

The outcome of this is that you really do need expert help and that is going to mean paying fees to a lawyer or consultant .

[Peter Pedant]

yippee ! so did I

tax consultant - there are significant tax implications to Plan A

and Plan B - one lawyer commented - wills settlement trusts have just about had their day