Parents signing over house to child

[getupgonow]

My friend was telling me that her parent has signed their house over to her. This was done 7 years ago.

I don't know much about the legal side, are there any drawbacks to doing this?

Have the parents stayed living there without the daughter and not paid rent? If so any inheritance tax benefit they were trying to get won't have worked.

Ah ok - how does that work then? Do they need to prove that they've paid rent to prove ownership?

I don't think it's worth enough to pay inheritance tax, but more to prevent it from being taken into consideration for any future care home fees.

Does the same rule apply?

Could be deemed to be deprivation of assets www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/deprivation-of-assets/

There’s no time limit on deprivation of capital if it’s classed as such. Folks always think it’s 7 years but that’s inheritance tax.

The risks are something happening to their child. Divorce, separation, debt/bankruptcy, needing to claim benefits or death.

Friends of PIL tried this and it ended very very badly for them. They ended up losing their home because of their son’s financial issues.

That's interesting thanks. I was under the impression that anything done 7+ years ago wouldn't be counted, but maybe not.

No time limit on deprivation of capital.

If they are still living in the home but not paying market rent, it is considered a gift with reservation of benefit and the full value of the home would remain in their estate at death.

Also, it would mean when they pass the children do not benefit from a CGT uplift, so if they sell it they will have to pay CGT on the gain from when the house was transferred to them and when it was sold.

Whatever they think they are doing is not going to work.

Thanks - that's all really helpful. The parent says they got legal advice and it's all been done above board, but that sounds questionable in light of what you've all said.

I think deprivation of capital is linked to 'illness' - was it done because they knew it was likely they would end up in a care home in the future?

They can look at medical records and see if there was any evidence about this.

That's interesting thanks. I was under the impression that anything done 7+ years ago wouldn't be counted, but maybe not.

People often think that, but that’s because gifts and inheritance tax have 7 years attached to them.

Deliberately depriving yourself of assets or money to claim benefits or care fees is not the same. Otherwise everyone would do it

also if they decide to charge their parent rent as some sort of proof they should remember the penalties for not fulfilling legal obligations (gas safety certificates etc) can be quite high.

It may have been absolutely legal but the intention of avoiding care fees just won’t work.

There are companies who claim to be able to legally help you avoid selling your house for care fees by various means
There was an expose on R4 a while ago on it. The council can and will still go after people for “deprivation of assets”, some councils employ people who’s job I s just to do this. One of them was on the R4 piece and he said that people should believe these companies who make the claims. There was also someone on from one of these companies and he was very evasive
My Mum looked into it and wasn’t almost convinced but I asked he to check with her solicitor as well and he said that what was being proposed would print work and so she would be paying £ to these con artists for nothing

Thank you for posting this OP. My DP and I were thinking of doing that very thing with our DC (we're also worried that they will never get on the housing ladder)
I wasn't aware that the deprivation of assets was not time-limited.
We'll have to think again.

I was under the impression that anything done 7+ years ago wouldn't be counted
Nope. The 7 year limit is for inheritance tax etc. There’s no time limit on deprivation of assets. HOWEVER to claim deprivation of assets the council would have to prove that was the intention. If the parent had no care needs at the time the asset was transferred and no expectation that they’d need care, then it would be difficult to prove deprivation of assets.

If the parent had no care needs at the time the asset was transferred and no expectation that they’d need care, then it would be difficult to prove deprivation of asset

This. I work in an office where people advise older people about this. I've asked those questions - e.g. a parent gives a child a large amount of money - can this be looked at by the Council.

It can be very hard to say it was deprivation of assets if there was no apparent care needs at the time. All to do with £23,250.....

There’s a case locally that could have implications wide depending on how it goes.

The council are pushing it to be deprivation because there was no reason for it, other than to avoid later care fees. Basically an averagely well off woman transferred her house into her very wealthy off son’s name.

What if you transferred your house into say daughters name as a gift
Then she splits up with her husband
He then comes after his 50 per cent of your house

My parents knew someone whose child kicked them out of their own house once ownership was transferred. Risky if there is ever a fallout. Or divorce, as pp said. Or death, severe injury resulting in a long term vegetative state...

Personally, I wouldn't bother.

I don't believe the parent was ill (although in their 70s, so some potential future care need could have been in mind), however close family members had been very ill at the time of transfer, so this could have been in mind.

It sounds like a straight forward deprivation of assets, can't think of any other sound reason why they would transfer ownership, continue to live there, maintain the property and not pay rent.

Morally abhorrent, will they get away with it? Maybe, hopefully not.

Thanks all. The parent isn't very legally savvy, so I wonder if the legal advice was a bit suspect.

Either way, I've let my friend know so that they're prepared for the implications you've all mentioned.

I'm guessing there's nothing that can be done to put it right, other than transferring back to the parent?

Morally abhorrent, will they get away with it?

^^ really?

So a women works hard to purchase and maintain her own property and wishes her children to benefit from her hard work. Along side this she contributes to the system for others less able (read as majority less willing)
Unfortunately the current government believe they are entitled to take all she worked for as compensation for care if she needs it.
Next door Doris has never worked a day in her life never paid rent or tax, never contributed to the system but will get her care cost free and gratis.
Your morals are screwed along with the people who run this country. 😡

@WeakAsIAm, Your anger is caused by a misplaced sense of entitlement, it is not how the benefits system does or should work. If a person woman or man, needs care why on earth, if they have the funds to pay for it, should the tax payer fund it instead?

Benefits such as care in old age are there for those that cannot afford it themselves, not to fund inheritances for greedy children.

I guess it depends how old they were when they gave it away, how long since they gave it away and did they already believe that they would need to go into a care home at some stage.

The fact that it was done 7 years ago and assuming neither of the parents was in imminent need of a care home at that time, I don't think it will count as deprivation of assets

What counts as deprivation of assets?
Deprivation of assets applies when you intentionally reduce your assets, such as money, property or income, so these won’t be included when the council calculates how much you need to pay towards the care you receive.^

When your council is deciding whether getting rid of property and money has been a deliberate deprivation of assets, they will consider two things:

You must have known at the time you got rid of your property or money that you needed or may need care and support
Avoiding paying for care must have been a significant reason for giving away your home or reducing your savings.

It’s not just giving away your money that could be seen as a deliberate deprivation of assets. Different methods of reducing your money or property could count too, including:

giving away a lump sum of money.
transferring the title deeds of your property to someone else.

suddenly spending a lot of money in a way which is unusual for your normal spending.

gambling the money away.

using savings to buy possessions, such as jewellery or a car, which would be excluded from the means test.

If the local council thinks that you have deliberately reduced your assets to avoid care fees, they may still include the value of the assets you no longer have when they do the means test.

Unless they can come up with another reason for it then

Avoiding paying for care must have been a significant reason for giving away your home or reducing your savings.

basically covers most people really. Especially when even discussing it with relatives means you are acknowledging that you may need care or support.