My mum wants to put me partly on the ownership of her house

[paul2louise]

My mum is on her own after loosing her partner last year. I have no siblings. Mum has been talking to some friends and has suggested that she puts me on half of her house. I know absolutely nothing about all this and been trying to Google it and read things like capital gains tax and deprivation of assets. I own my own house with my husband. Thanks

Why would she do that? Once she has gone the money staying tied up in the house will be useless to you. Best she just leaves it to you when she dies, unless she is thinking she will need care help, so trying to ensure some money is left for you. Just depends really doesn’t it.

Why does she want to go down this route? Is it an inheritance/ care home fees thing?
Things to think about - both of you. I am not a lawyer btw, and if you want to progress this idea, you should both talk to one.

Are there any debts secured against the house?
How old is your mum and what are her plans re old age / care?
If you part own the house , are you taking on maintenance and repair bills?
With respect to capital gains tax, you will be liable to pay it upon selling the house if it’s not your main residence.
I think it will be a second home to you so if you are in the UK and you & DH decide to move, you may be hit for additional stamp duty on your next purchase
What’s the position if you & DH split up? Or if you predecease your mum- does DH inherit your half.

Just my random thoughts. I am sure someone more qualified than I will come along.

You and your mum need legal advice . It’s not something to be done lightly there are legal and financial implications.

You both need legal advice - there is a lot to consider

Talk to an Independent Financial Adviser and to a solicitor.

Does your Mum have a will? If not then she should be encouraged to make one. Does the will (if it exists) specify you as the beneficiary who will inherit her house? If it does then that might be all she needs to do, although she might need to set up trusts.

Perhaps she wants to protect at least some of the value of the house for you so that it can't be touched if she needs to pay for care? I believe again that this is usually done by placing it in trust. However, I am no expert so would say that you need proper legal and financial advice. Otherwise it could seen as "deprivation of assets", which is illegal.

A good solicitor (for the will) and IFA will be able to advise.

I would go to age uk branch and ask for their recommendations for solicitors who deal with this in the area that your mum is. It’s worth paying for some good legal advice now, to avoid hefty unexpected bills later on. Hope it all works out.

My mum was advised to do this by her financial adviser as a way to reduce inheritance tax. We didn't do it.

Firstly, it would have been split 4 ways between her and three kids. My quarter would form part of my estate and same with my siblings. We are all married and divorce could have put mums house at risk as spouses could have claimed some value.

The only way to do it properly would be for mum to pay market value rent to her oelwn children for living in her own rent. Otherwise it would be claimed to be deliberate reduction of assets. there are dodgy ways around that but likely fraudulent if proven. We didn't really see the value of it and we are luckily that it's a big estates and inheritance (should we get any) will be significant while also paying the proper amount of inheritance tax.

If she wants you to have money before she dies it's better to down size and gift you a second home or money that way but financial advice is really needed.

One major risk would be that if you and your DH split, your portion of the house would be in the pot as a marital asset, and the division of assets might force a sale of the house out from under her. I'm sure you don't think this will happen, but no one ever does.

Under what circumstances might it be to OP's benefit to do this, given OP's actual circumstances (already an owner-occupier).

I am trying to gauge some idea of all this so thank you all so much for quick replies. I think she is panicked because her friend has got poorly really quickly and is going to need care and she probably thinks it's a good thing to do to give me half of the house. She said she is going to speak to a solicitor but I am worried that they will just do what she asks without explaining her options.

So, yup, it is to avoid care fees. It won't work. Councils weren't born yesterday; they will just pursue you for half the house value because they will 100% count it as deliberate deprivation of assets.

@paul2louise this is why you need to speak to a solicitor who is a specialist in this. To do it to avoid care fees won’t work - deprivation of assets…. Plus there may well be issues for you already being a homeowner.

I have told Mum to hold off doing anything. We need to speak to someone who can advise her about all of her estate as she has some savings and what she is allowed to gift to us.

I believe again that this is usually done by placing it in trust I believe this wouldn’t work as a route to avoid care fees as she would be named as a beneficiary of the trust (and therefore would have access to as much as was needed for her care), or if she paid full market rent, which would make it blatantly obvious it was an attempt at deprivation of assets.

My mum was advised to do this by her financial adviser as a way to reduce inheritance tax. Was this some time ago? It was common to split the house, and when the first person died, by their will or by a deed if variation, leave the children a share of the house not exceeding the IHT allowance. Then when the survivor died, they had their own IHT allowance to put against their estate. I can’t see that has any advantage now the law has been changed so that the first to die can pass their IHT allowance to the survivor, so their are two IHT allowances to put against the estate.

Otherwise it could seen as "deprivation of assets", which is illegal I’m not sure it’s illegal, what happens us probably worse, that they assess you as if you still have the money. So if you are down to £23k because you’ve given your house away, they’ll find out (they can look back as far as they like, there’s no 7 year cut-off), find out you owned a house you gave away, treat you as if you’ve still got the house, and assess you as being a self funder with no LA contribution. What happens next in practical terms I don’t know. The money’s got to come from somewhere.

The only way to do it properly would be for mum to pay market value rent to her own children for living in her own rent. Otherwise it would be claimed to be deliberate reduction of assets That would just exacerbate the deprivation of assets, first she’s deprived herself of the asset of a house, now she’s making further deprivations by paying rent. The paying full market rent advice is in relation to IHT. As long as she’s living at low or no rent in a house she has given away, it’s a GRoB - a gift with reservation of benefit - and will still be treated for IHT as if she’d never given it away.

Of course, if the house is high value, it may be that she only ever needs half of it for care fees. So giving you half won’t matter (and wouldn’t be deprivation of assets because the half she retained was sufficient for her care and she wasn’t putting herself in a position where she needed LA support). But it is of no benefit either, so the legal fees she’s spent on it are just wasted. She might as well leave it till you get it in her will.

I have spoken to mum agreed we are going to do nothing with her house at the moment. I said we need to speak to Age Concern or similar about future plans.