. . . to think parents are being naive about our "inheritance"?

[OhFFSNotAnotherVirus]

Just pondering . . . for some reason it's niggling at me, maybe because I find their lack of understanding frustrating!

I also want to point out that I in no way "expect" anything from my parents - I've been financially independent since I was 18 and I'm proud of what I've achieved by myself.

Parent are 65, I have one brother and one sister. Parents gave my brother their life savings (close to £100k) so he could buy a nicer house than he could afford by himself. Parents told me and my sister that they would change their wills to leave their house (a small townhouse worth about £200k) to the two of us, to make it fair.

I don't think it is fair, though. Chances are the house will be sold in the future to pay for their care. They seem blissfully unaware that this is a possibility - or a likelihood - and seem almost smug about having done the right thing by all three of their children. I've brought up the possibility that the house might need to be sold to pay for care, but they dismissed this, saying absolutely not, they wouldn't be going into a home, they'd rather go to Dignitas first . . .

I'm saying nothing further, there's no point and I know there's no entitlement here. But AIBU to be a bit . . . ?

Oh and this all happened a couple of years ago and they haven't changed their wills anyway

14Ginfilledcats
Quote
"My in laws have put their house in my husband and his sisters name (they're early 60s) and pay a token rent if £1 a month. This bypasses the house being used to pay for their care as long as it's in their sons name for 7 years before any costs are needed.

My parents are going to do the same I think"

People thinking of signing over their house to their kids should think very carefully what will happen if their adult child divorces, becomes ill and unable to work (e.g. needs to claim benefits), goes insolvent/bancrupt or predeceases them (and parents house in childs name is then passes on to their own beneficiaries e.g. the grandchildren or spouce)

If the parents don't pay a market rent then this is called "a gift with reservation" and not treated as given away at all - so all the downsides above but not ignored for care fee purposes.

Additionally the owners (the children) will need to pay capital gains tax on the increase in the house price from when they are given it until when they sell it (less their annual allowance). So if this arrangement lasted 20 years and the house price had increased from 200k to 400k then capital gains tax would be payable on the 200k increase (less the annual allowance) when no inheritance tax would have been due if the estate was under the threshold.

As with residential care for looked after children, the amount of taxpayer money that goes into private pockets and the effect on the cost of those placements is a scandal (one the CMA is finally looking into for children’s homes, thankfully). But that’s probably for another thread!

My elderly relative is in an expensive care home, the care is excellent, the food is excellent. When I visit I'm offered a meal and can eat with her. They have a guest room so relatives travelling long distances can stay over.

You have to pick carefully, the most expensive aren't always the best but the cheapest are rarely the best. The LA where I live put out to tender for beds and they buy the cheapest.

Yes that’s true about the CGT when the children dispose of the house winter2020 if it’s been given to them in their parents’ lifetime. I was talking about the tax payable when the DPs give to the DCs. The tax payable when the DC sell is yet another reason why lifetime gift with reservation is a terrible idea.

Your parents have done nothing to give effect to what they promised. The facts are you will presumably gain 1/3rd of the house subject to all the caveats mentioned and your DB gets 1/3 plus 100k.

Do not rule out the likelihood of prodigal DB returning with his begging bowl a decade down the line. He sells his house, moves in with your parents to help. They can’t make him homeless so he cops the house leaving you with nothing.

I would ask them to prove their good faith by attend a family meeting with a solicitor specialising in inheritance planning. As I said previously it might be possible to put the house into a form of trust to protect your inheritance. This would stop them from changing their will later. The law is complex and legal advice is essential.

@Ginfilledcats

My in laws have put their house in my husband and his sisters name (they're early 60s) and pay a token rent if £1 a month. This bypasses the house being used to pay for their care as long as it's in their sons name for 7 years before any costs are needed.

My parents are going to do the same I think.

AFAIK There is no time limit on "deprivation of assets" (disposing of the home to avoid paying care costs).

The 7-year gift window usually refers to Inheritance Tax.

The fact the house is in the sons name, means that if he was divorced or declared bankrupt , claims could be made on that asset. And fingers crossed he won't need to claim means-tested benefits.

My grandfather had millions of pounds worth of property that nearly all had to be sold for his care. He had a stroke and spent nearly 15 years in care. Unable to access things like digitas. Which I actually think he’d gone too. However there are really strict rules regarding digitas and he didn’t pass being able to drink the stuff.

It happened with him too. My uncle got paid out a million. But then his care took all but one house.

However. We didn’t really mind. I can see how you would. But in our head. It was his money. If he wanted to do that. He could. We’d rather he was here and looked after. Than money.

It’s so difficult. Money makes everything worse.

I understand why you’re annoyed but realistically there’s not much you can do about it now. And if you did manage to make your parents see sense, all that would achieve is making them feel crap, which I assume you don’t want. I think you have to let it go and think that anything you do get from your parents will be a bonus.

@NeverTalkToStrangers

This has been an enlightening thread though. I knew that the deprivation of assets rules meant that you can’t simply “give away” your house to you children and continue living in it to avoid IHT/care home fees. But the potentially disastrous consequences if your child then gets divorced had never occurred to me. What a nightmare! Arguably a just reward for unethical behaviour though.

Divorce is not the only pitfall. In the current economic climate, many businesses are in peril, so any self employed person or owner of a small business could go into debt and have their assets seized by creditors. Anyone at all can become disabled (cancer, accident, long covid) and never work again. Then when they apply for any means -tested benefits , the last thing they need is a major asset on public record. One that's liable for CGT if sold.

Bloody hell 2bazookas - the reasons why it’s a bad idea just keep on coming.

I have a different father to my siblings, I was disowned/never claimed by my bio fathers family but raised by my mam and stepdad (who has been my 'dad' since I was a baby).

My mam has informed me she is leaving everything to my siblings as she is completely under the impression that I will recieve bio fathers whole estate as his 'only child' (frankly I dont even know I am his only bio child, he has definately had 5 stepchildren during 2 marraiges though and seems to support my cousins so plenty of other he could leave stuff too).

I have never recieved anything from bio dad in my life, he is completely estranged and didnt even pay a penny of court ordered maintence during my life so what the hell makes he think he would leave anything to me I dont know.

My mam had a fund set up for me as a baby (was suppose to get it when I turned 18 for things like uni, a house deposit or driving lessons and car etc...) before my siblings where born but when they where born she emptied it and used it to buy a much bigger house (she claimed she thought bio father would also have set one up to give me, once again no idea where she got that idea from - I obviously got nothing).

That house paid for by my childhood savings fund is the one that is now going to siblings.

It stung at first but not because I want money (at 18 it really would have helped but now I never accept money when they do offer, I have been independant since 16 when they kicked me out to 'go live with bio dad') but it hurts purely because it feels like Im the cuckoo in the nest that they dont really want, like if they just ignore me Ill have to be picked up by someone else and be their problem.

@MayorGoodwaysChicken

Completely agree with you.

I think it's about self respect.

It is such a hugely unfair thing to do that I can't imagine it not putting a huge distance between me and my parents.

Similarly with my own children, I wouldn't be able to defend such unfairness so of course it would be well within their right to say sod her.

Ginfilled they've been badly advised with the 7 year rule as pp have said.
But I'm wondering who they expect should be paying for their care if needed. Not the rest of us taxpayers surely??!!

Self respect in so much as not accepting being treated so unfairly.

@PawPawPaw

Your parents have done nothing to give effect to what they promised. The facts are you will presumably gain 1/3rd of the house subject to all the caveats mentioned and your DB gets 1/3 plus 100k.

Do not rule out the likelihood of prodigal DB returning with his begging bowl a decade down the line. He sells his house, moves in with your parents to help. They can’t make him homeless so he cops the house leaving you with nothing.

I would ask them to prove their good faith by attend a family meeting with a solicitor specialising in inheritance planning. As I said previously it might be possible to put the house into a form of trust to protect your inheritance. This would stop them from changing their will later. The law is complex and legal advice is essential.

I'd be very wary of doing what you suggest in the last paragraph. If one of my children asked me to prove anything by seeing a solicitor and making commitments with my assets I'd tell them not to worry as they aren't getting anything.

What a cheek.

I agree with you OP

@Ginfilledcats

My in laws have put their house in my husband and his sisters name (they're early 60s) and pay a token rent if £1 a month. This bypasses the house being used to pay for their care as long as it's in their sons name for 7 years before any costs are needed.

My parents are going to do the same I think.

yeah....that may not be as true as they think it is...and the seven year thing is not true at all. the token rent is a dead giveaway! www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/do-i-have-to-sell-my-home-to-pay-for-care/

Additionally the owners (the children) will need to pay capital gains tax on the increase

Plus tax on the income of rent.

Elderly rellie gets £1k pm income, pays a market rent on the home they have gifted to offspring. Offspring must declare this for tax and pay tax on it.

Everyone is worse off.
Terrible idea frankly.

Perhaps your parents have made provisions in their will that the house cannot be sold for their care (in trust perhaps) . I agree, not fair at all, but as you say you're not expecting anything. Difficult one.

it hurts purely because it feels like Im the cuckoo in the nest that they dont really want

This is awful @mam0918. It would break my heart, too - in fact, our family was similar with regard to me, and the feeling of being unloved is gutting. (Also makes it hard - or it did with me - to feel of any value to anyone).

Sorry - not trying to hi-jack your comment. I just wanted you to know that I can totally understand the emotional pain this causes you, and it would be the same if it was for £10 or £10 million.

@Straighttalking1

Perhaps your parents have made provisions in their will that the house cannot be sold for their care (in trust perhaps) . I agree, not fair at all, but as you say you're not expecting anything. Difficult one.

Whatever they do if its deemed as deliberate deprivation of assets, they won't get away with it. Local Authorities don't have to do anything except decide that is what has happened and then calculate their contribution to fees as though the person still owned and could sell the asset. people think that the local authority actually TAKES the house or other asset and if they don't own the asset then the local authority can't take it and have to cough up more money. This is not true. What LA's do is a financial assessment that says "your assets are xxx and therefore our contribution to your ongoing care will be yyy" If they believe that you have deliberately deprived yourself of an asset then they just add the value of it to the xxx amount. ...also the "provision in the will thing" won't kick in until one or both are dead and don't need care......If there is any asset in a will that is no longer the property of the dead person when they die then its just treated as though its not part of the estate and the person who was left it gets nothing unless the will is written as shares of total assets.

PawPawPaw
"Your parents have done nothing to give effect to what they promised. The facts are you will presumably gain 1/3rd of the house subject to all the caveats mentioned and your DB gets 1/3 plus 100k.

Do not rule out the likelihood of prodigal DB returning with his begging bowl a decade down the line. He sells his house, moves in with your parents to help. They can’t make him homeless so he cops the house leaving you with nothing.

I would ask them to prove their good faith by attend a family meeting with a solicitor specialising in inheritance planning. As I said previously it might be possible to put the house into a form of trust to protect your inheritance. This would stop them from changing their will later. The law is complex and legal advice is essential."

yeah my answer to that would be short and obscene.

It's odd because it's actually not the money that grates - I'm content with where I am financially, I've never relied on any help or expected anything from my parents. It's simply their belief that they've "looked after" all three of us equally that grates a little when something reminds me about it and it pops into my head.

I think it's frustration - maybe it's hard to see them getting older and not as switched-on or savvy as they used to be? They seem deluded. A small part of me wants to point out the cold hard facts to them.

But I won't - I love them, and I love my siblings, so I wouldn't do anything to hurt any of them. I have pointed out in the past that the house would be sold to pay for care; to point it out again, or to argue that they can't predict what's going to happen to them as they get older, would labour the point and no good would come of it.

I'm always baffled when I see these posts of parents leaving or helping one child more than another.

I mean I understand if there are health issues or something like that but most often it doesnt appear to be the case.

My parents are being fair with any inheritance even though I really don't think they want to. There's only me and my sibling who has caused so many issues over the years and cost them money in things like legal fees, paying for their children etc and is now a drug addict. But still everything is being split 50:50.

I just keep telling them to spend everything now - it's their money, enjoy it!

I wonder if they were put under any pressure by their son to give him all their money

So do I

More to the point, if he's happily pocketed their savings because his lifestyle choices left him without assets of his own, what's to stop him coming back for more? And is it just me who can here "The girls will be okay, their husvbands will look after them" used as the rationale?