Moving Houses out of way of Tax/care fees
Discussion
Ive zero knowledge on the subject and of course will be looking for proper advice but need to get a feel to start on how this would work.
After a few friends and family have had their homes taken to pay care home fees later in life it has prompted my parents to start to look on ways to stop this. They've mentioned it to me on a couple of occasions that if they ever did need care they hate the fact that their assetts are used to pay thsse fees but someone whos never worked gets it for free. Not looking to start a debate on the morals of this if im honest and i agree with their thoughts.
They've both mentioned that they would like to somehow transfer them to me, and obviously continue to live there forever. Is this possible and where do we start? Any tax implications?
Background is i'm a only child so no siblings. Im mid 30's and parents mid to late 60's so hopefully lots of years left. I own my own home with my wife with around a 30% mortgage outstanding. This will probably be paid in next 5 years via overpayments.
Parents are divorced - Dad owns his house worth circa £180k. Mum owns her own house at circa £350k, but also has 2 rental houses which are owned outright at £230k and £100k.
Where do we start , and how soon?
thanks in advance
After a few friends and family have had their homes taken to pay care home fees later in life it has prompted my parents to start to look on ways to stop this. They've mentioned it to me on a couple of occasions that if they ever did need care they hate the fact that their assetts are used to pay thsse fees but someone whos never worked gets it for free. Not looking to start a debate on the morals of this if im honest and i agree with their thoughts.
They've both mentioned that they would like to somehow transfer them to me, and obviously continue to live there forever. Is this possible and where do we start? Any tax implications?
Background is i'm a only child so no siblings. Im mid 30's and parents mid to late 60's so hopefully lots of years left. I own my own home with my wife with around a 30% mortgage outstanding. This will probably be paid in next 5 years via overpayments.
Parents are divorced - Dad owns his house worth circa £180k. Mum owns her own house at circa £350k, but also has 2 rental houses which are owned outright at £230k and £100k.
Where do we start , and how soon?
thanks in advance
d8mok said:
Ive zero knowledge on the subject and of course will be looking for proper advice but need to get a feel to start on how this would work.
After a few friends and family have had their homes taken to pay care home fees later in life it has prompted my parents to start to look on ways to stop this. They've mentioned it to me on a couple of occasions that if they ever did need care they hate the fact that their assetts are used to pay thsse fees but someone whos never worked gets it for free. Not looking to start a debate on the morals of this if im honest and i agree with their thoughts.
They've both mentioned that they would like to somehow transfer them to me, and obviously continue to live there forever. Is this possible and where do we start? Any tax implications?
Background is i'm a only child so no siblings. Im mid 30's and parents mid to late 60's so hopefully lots of years left. I own my own home with my wife with around a 30% mortgage outstanding. This will probably be paid in next 5 years via overpayments.
Parents are divorced - Dad owns his house worth circa £180k. Mum owns her own house at circa £350k, but also has 2 rental houses which are owned outright at £230k and £100k.
Where do we start , and how soon?
thanks in advance
My family are considering similar - best to take fully insured professional advice as its a very costly, complicated areaAfter a few friends and family have had their homes taken to pay care home fees later in life it has prompted my parents to start to look on ways to stop this. They've mentioned it to me on a couple of occasions that if they ever did need care they hate the fact that their assetts are used to pay thsse fees but someone whos never worked gets it for free. Not looking to start a debate on the morals of this if im honest and i agree with their thoughts.
They've both mentioned that they would like to somehow transfer them to me, and obviously continue to live there forever. Is this possible and where do we start? Any tax implications?
Background is i'm a only child so no siblings. Im mid 30's and parents mid to late 60's so hopefully lots of years left. I own my own home with my wife with around a 30% mortgage outstanding. This will probably be paid in next 5 years via overpayments.
Parents are divorced - Dad owns his house worth circa £180k. Mum owns her own house at circa £350k, but also has 2 rental houses which are owned outright at £230k and £100k.
Where do we start , and how soon?
thanks in advance
Afraid I don't know the answer, but this sparked a memory of previous threads and the phrase "gifts with reservation" - turns out (from Googling) that what I should have remembered is "gifts with reservation benefit"...
The following link may be useful (top result on Google), but you'd need "proper" advice I think.
https://www.aprilking.co.uk/2017/05/31/gifts-with-...
The following link may be useful (top result on Google), but you'd need "proper" advice I think.
https://www.aprilking.co.uk/2017/05/31/gifts-with-...
To be fair I understand people not wanting to pay for stuff, I don't want to pay for stuff, but having seen the disparity between expensive self funded care provision (my grandparents were fairly wealthy and had a very nice care home) and the places where you get stuck by the Local authority if you're not self funded... Trust me I'd choose to live my last in relative comfort and let the grandchildren fend for themselves.
FredClogs said:
To be fair I understand people not wanting to pay for stuff, I don't want to pay for stuff, but having seen the disparity between expensive self funded care provision (my grandparents were fairly wealthy and had a very nice care home) and the places where you get stuck by the Local authority if you're not self funded... Trust me I'd choose to live my last in relative comfort and let the grandchildren fend for themselves.
Not always true. My step grand mother is in a very nice private care home, Paid for by the local authority. The council pay £650 a week for her, my partners grandmother, is in the same home, paying £780 for the same care, same care home same everything. It is a case of if they need to go into care but it’s over 7 years since the gift was gifted there is nothing they can do. Worst they could do is put a charge on one of the houses or force you to sell it if your parents did need care in less than 7 years.
I think If you have more than £40k in the bank you have to self fund, between 18-40k you make a contribution and under I think 18k or maybe 12k there’s no fees to pay.
It would be up to the council to raise a case that you had delibrity desposed of the house to you to avoid the fees which would be very hard to do it was over 7 years. After all they may never need to go into a care home anyway.
I would take some legal advise and do it.
The 7 years is completely and utterly wrong.
That is the timescale for surviving IHT gifts and has nothing to do with gifting to avoid care home fees for which there is no statutory minimum period. In fact each LA can look at things differently. If you've got an IHT issue then gifting and surviving for 7 years would make a compelling case against paying the fees, but is not a guarantee by any stretch.
If there is no IHT liability it would be very, very tenuous to say the least.
That is the timescale for surviving IHT gifts and has nothing to do with gifting to avoid care home fees for which there is no statutory minimum period. In fact each LA can look at things differently. If you've got an IHT issue then gifting and surviving for 7 years would make a compelling case against paying the fees, but is not a guarantee by any stretch.
If there is no IHT liability it would be very, very tenuous to say the least.
I'll correct some of the "facts" on here.
The 7 years that people keep mentioning is nothing to do with care fees, that is purely related to inheritance tax, there is no specified time limit that a local authority can "look back" over someones finances to see if there has been "self deprivation" (not a "gift with reservation of benefit" again that is inheritance tax and nothing to to do with care fees)
Full care fees also kick in when you have assets of more than £23k (under £14k and you don't have to pay anything)
Putting assets into a lifetime discretionary trust is one of the better options but again self deprivation may be an issue, the trust itself is not a magic solution. Gifting assets to you outright may also work but there is far more risk to your parents; should you divorce, become bankrupt or die before them their house is directly at risk, no professional adviser worth their salt would ever recommend handing over assets outright to children due to those risks.
Will trusts are another option, and could be used to protect part of a house for a married couple and don't come under the scrutiny of self deprivation.
The 7 years that people keep mentioning is nothing to do with care fees, that is purely related to inheritance tax, there is no specified time limit that a local authority can "look back" over someones finances to see if there has been "self deprivation" (not a "gift with reservation of benefit" again that is inheritance tax and nothing to to do with care fees)
Full care fees also kick in when you have assets of more than £23k (under £14k and you don't have to pay anything)
Putting assets into a lifetime discretionary trust is one of the better options but again self deprivation may be an issue, the trust itself is not a magic solution. Gifting assets to you outright may also work but there is far more risk to your parents; should you divorce, become bankrupt or die before them their house is directly at risk, no professional adviser worth their salt would ever recommend handing over assets outright to children due to those risks.
Will trusts are another option, and could be used to protect part of a house for a married couple and don't come under the scrutiny of self deprivation.
Nickbrapp said:
Not always true. My step grand mother is in a very nice private care home, Paid for by the local authority. The council pay £650 a week for her, my partners grandmother, is in the same home, paying £780 for the same care, same care home same everything.
That's quite a high rate for an LA to pay, it's often far less than that.In places where there's a good level of demand, and the LA payment is low, many homes simply won't take LA funded residents.
ellroy said:
The 7 years is completely and utterly wrong.
That is the timescale for surviving IHT gifts and has nothing to do with gifting to avoid care home fees for which there is no statutory minimum period. In fact each LA can look at things differently. If you've got an IHT issue then gifting and surviving for 7 years would make a compelling case against paying the fees, but is not a guarantee by any stretch.
If there is no IHT liability it would be very, very tenuous to say the least.
When the LA means tests the potential claimaint, they ask if they EVER owned property. Many used to let it go after just 6 months, but they're far keener now.That is the timescale for surviving IHT gifts and has nothing to do with gifting to avoid care home fees for which there is no statutory minimum period. In fact each LA can look at things differently. If you've got an IHT issue then gifting and surviving for 7 years would make a compelling case against paying the fees, but is not a guarantee by any stretch.
If there is no IHT liability it would be very, very tenuous to say the least.
Mr-B said:
I'll correct some of the "facts" on here.
The 7 years that people keep mentioning is nothing to do with care fees, that is purely related to inheritance tax, there is no specified time limit that a local authority can "look back" over someones finances to see if there has been "self deprivation" (not a "gift with reservation of benefit" again that is inheritance tax and nothing to to do with care fees)
Full care fees also kick in when you have assets of more than £23k (under £14k and you don't have to pay anything)
Putting assets into a lifetime discretionary trust is one of the better options but again self deprivation may be an issue, the trust itself is not a magic solution. Gifting assets to you outright may also work but there is far more risk to your parents; should you divorce, become bankrupt or die before them their house is directly at risk, no professional adviser worth their salt would ever recommend handing over assets outright to children due to those risks.
Will trusts are another option, and could be used to protect part of a house for a married couple and don't come under the scrutiny of self deprivation.
I have been through this situation several years ago so it may have changed aged since, but this is pretty much bang on what our solicitor advised.The 7 years that people keep mentioning is nothing to do with care fees, that is purely related to inheritance tax, there is no specified time limit that a local authority can "look back" over someones finances to see if there has been "self deprivation" (not a "gift with reservation of benefit" again that is inheritance tax and nothing to to do with care fees)
Full care fees also kick in when you have assets of more than £23k (under £14k and you don't have to pay anything)
Putting assets into a lifetime discretionary trust is one of the better options but again self deprivation may be an issue, the trust itself is not a magic solution. Gifting assets to you outright may also work but there is far more risk to your parents; should you divorce, become bankrupt or die before them their house is directly at risk, no professional adviser worth their salt would ever recommend handing over assets outright to children due to those risks.
Will trusts are another option, and could be used to protect part of a house for a married couple and don't come under the scrutiny of self deprivation.
We were also advised if I was gifted a property, I should charge market rent to the parent to 'strengthen my case" should the local authorities start making noises and you would therefore be advised to declare that rent and pay tax on it.
Assuming your mother is in good health and so no question of trying to avoid care home fees, she may with to think about settling the rental properties in trust for your children, if you have any. Grandparental trusts can still be quite attractive in certain circumstances - used to pay school fees etc. Certainly worth taking professional advice. I would forget about trying to have a parent give you a house if they still live in it - the chances of attack by LA is extremely high and the fees to fight such a claim could be substantial.
williaa68 said:
Assuming your mother is in good health and so no question of trying to avoid care home fees, she may with to think about settling the rental properties in trust for your children, if you have any. Grandparental trusts can still be quite attractive in certain circumstances - used to pay school fees etc. Certainly worth taking professional advice. I would forget about trying to have a parent give you a house if they still live in it - the chances of attack by LA is extremely high and the fees to fight such a claim could be substantial.
Beware of the tax on trusts down this route. You're potentially moving an asset exempt from CGT as PPR into a trust asset that at will be liable for CGT and will have at most half an annual allowance. Income tax wise, such as rental, you would more than likely be looking at the rate for trusts which is 45%. Maybe worth it for some, but go in with your eyes very much wide open.
oyster said:
What can a council do if the oldies just piss the money away on holidays, TVs, cars etc?
Nothing that's why it's better to piss the kids inheritance up the wall, you get to have a great time and you don't have to worry about the kids not getting your home when you haven't got one to lose to care fees, win win.
oyster said:
What can a council do if the oldies just piss the money away on holidays, TVs, cars etc?
Put you in a s
t care home. A some of them are really st. I don't know exactly how the system works so it would be wrong to comment on the how's and whys but from what I've seen there's no doubt in my mind being self funded gives more options and access to better facilities. FredClogs said:
Put you in a st care home. A some of them are really st. I don't know exactly how the system works so it would be wrong to comment on the how's and whys but from what I've seen there's no doubt in my mind being self funded gives more options and access to better facilities.
These days by the time most people go into care homes they're pretty out of it anyway.t care home. A some of them are really st. I don't know exactly how the system works so it would be wrong to comment on the how's and whys but from what I've seen there's no doubt in my mind being self funded gives more options and access to better facilities. Sheepshanks said:
FredClogs said:
Put you in a st care home. A some of them are really st. I don't know exactly how the system works so it would be wrong to comment on the how's and whys but from what I've seen there's no doubt in my mind being self funded gives more options and access to better facilities.
These days by the time most people go into care homes they're pretty out of it anyway.t care home. A some of them are really st. I don't know exactly how the system works so it would be wrong to comment on the how's and whys but from what I've seen there's no doubt in my mind being self funded gives more options and access to better facilities. As for funding, if there's a medical need your care can be fully funded, if you just *want* care it generally won't.
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