DH talking about transferring our home to DSD to save care costs.

[Pleasemrstweedie]

DH and I are both early sixties, have been together 15 years and married for 13. We have no DC together but both have DC from previous relationships. The house we live in is in DH’s sole name. He bought it ten years before he met me and had paid the mortgage off by the time we got together. We have both made Wills and under the terms of his Will I have a life interest in the property ad be able to live there as long as I do not re-marry or co-habit. I can also, if necessary, buy another, more suitable property as I get older, on the same basis. On the death of the last of the two of us, the house is to be sold and the proceeds split, 90% to my DSD and 10% between my two DC. This reflects a contribution I made to refurbishment after we married. Our Wills were made eleven years ago and I think they are due for redrafting, given the fact that we have managed to stay married. I have mentioned this to DH a couple of times lately, but he’s not responded as yet.

However, if DH and I were to divorce, I could rely on my rights under the Matrimonial Homes Act, notwithstanding the terms of the Will, and I believe I would likely get more than the 10%.

Looking into the future, my understanding is that if DH needed care, the house would not be taken into account for funding purposes as long as I was still living there, and if I needed care, which is the more likely situation, then I would have no house to take into account anyway, because I only have a life interest.

DH has been talking to a friend who was able to keep his DF’s house in the family by having it transferred to other family members before care costs were incurred and now he wants to transfer his house to my DSD. He says that, as part of the deal, we would get to live there as long as we need to, presumably under a licence rather than a tenancy, but I’m really not sure that this would be a good idea. I think we might be able to show that there was no deprivation of assets as we are relatively young and healthy at the moment, but I believe it would leave me in a very vulnerable position, especially as DSD has been hostile to me through all the years I have known her.

DH seems to trust this friend who he thinks is a bit of a financial wizard, but I’d be interested to hear what others think.

I think you need to get your own independent legal advice before doing anything.

Transferring ownership to your step daughter is very unlikely to work. Any transfer of assets deemed as being done to avoid care costs owillr IHT be ignored. To be regarded as the owner your step daughter will need to actually act like the owner or live there, charge you a commercial debt for living there etc.
I think you need some proper advice. It all sounds a bit complicated and not particularly in your favour.

This sounds completely implausible to me Ignore the friend!

any particular reason you feel you should not have to pay living costs in the future? I hate this idea. The house is an asset and if it needs to be used for care then it should be used.

You need legal advice but I will state the obvious

1. If the authority can show you deliberately transferred the house to obtain a benefit it probably won't work

2.If you transfer a house it is no longer yours If your DSD died ,is bankrupted or is divorced the house is at risk

Bit harsh empire given it's the ops dhs idea - not hers it's not harsh because it's someone else's idea, it's the concept I don't agree with, not the person who thought of it

Is divorce something you like the idea of?

Sometimes you can transfer houses into a trust, but you need proper legal advice for this! This would be better than transferring it to a hostile party though, and less likely to be deprivation of assets. It would, however, be a chargeable disposal for IHT purposes so if it was more than the relevant amount (at least £325k, possibly £650k prevents one mil, not sure as it depends on circumstances) then the amount above is charged tax at 20% on the gross.

@Empireoftheclouds for what it's worth I don't agree with it either, but actually I think we've accidentally pretty much protected ourselves pretty well anyway.

To the PP who used the word 'implausible' - thank you. This wouldn't work, would it? DH has form for listening to this friend and it never ends well. I'm now doing some research so I can show him why it wouldn't work.

Thanks.

I would be very suspicious, ask him if he seriously thinks it is ok to transfer your home to someone who is hostile to you? If he does try to go ahead I would seek independent legal advice.

I don't know the rules about deprivation of assets but from a practical point of view, if the house is owned by your step daughter and your husband dies before you - she could kick you out and you end up homeless? You said she's hostile to you so that may be a possibility and it's one your husband needs to look at realistically and not just dismiss as unlikely. I agree you should get legal advice yourself if he wants to pursue this.

Parents worry about this a lot (care home fees meaning that they don't have an inheritance to give to their children) - mine kept on trying to suggest this (transferring the house) to me and my siblings. I kept on saying "no, what if I went bankrupt, then you would lose your home, and anyway I don't want the responsibility of your house" and after a while they stopped suggesting it. The house is there to be used for long term care at the end of life if my parents need it. I would rather know that they are well looked after.

Would there be capital gains tax payable if the house is being gifted to the DSD?

In your shoes OP I'd ask a solicitor about registering your interest in the house at the Land Registry.

BBC Moneybox did a programme on this last month:-

www.bbc.co.uk/programmes/b08m8q7z

More to do with trust funds but discusses the effectiveness of transfers.

Also if the DSD were ever to need benefits it could cause issues.

A Friend of mine has had this where his parent's house is in his name, and I think there are some funds too which he does not have access to. He is disabled and his wife also claims carer's benefits. They cannot convince the powers-that-be that they have no access to the money, no income from it so they have no benefits. Without the generosity of friends they would be destitute.

But he does have access to the money he owns a house and funds.

Choosing not to access and having no access are very different. He chooses to allow his parents to live rent free? He chooses not to spend the funds? Or are they actually his parents house and funds? If so he is conning the tax man so has lost his benefits you can't steal with one hand and take with other

Hmmm, it would probably be better for him to tidy up his financial affairs rather than relying on the generosity of friends.

You need independent legal advice. With the support of my solicitor, I transferred the deeds of my house to DD. We, DD her partner and I live together in said house. DDs will stipulates that the house cannot be sold without my agreement, that any subsequent house bought with the proceeds is covered by the same caveat as current house, that I am able to live in that house until I die, or until I choose not to live there.

It was quite a complex thing to do, but solicitor understood our needs and drafted wills and covenant accordingly- I hope

Couldn't you get him to understand that it's immoral to try and avoid care costs in this way? Why should the state pay on his behalf when he has assets?

Does he understand that retaining his assets would give him more choice over the standard of care home he - or you - might go into?

Talk to a solicitor about registering a caution against the title to the house so that he can't transfer it without your knowledge. You're in rather a vulnerable position with it being in his sole name.

And I agree with all those posters who say this is morally objectionable anyway: there isn't some divine right to have the taxpayer pay for your care so that you can hand down assets to the next generation.

I don't think its as straight forward as just putting it in her name, get proper advice. Theres time limits involved, she could be asked to provide bills to prove maintenance she might also need to pay a utility bill as well.
If she needs housing benefit she won't receive it as she "owns" a property already. I think there is capital gains tax involved as well.

It seems like actually he's not that bothered about protecting your interests in all this though. Is there a chance she could move into the home and make things difficult for you, so you move out? Theres plenty of examples of people who have said "oh but my child wouldn't do that to you" but push came to shove and they did.

I wouldn't do it without legal advice.

I know someone nice and trusting who signed over her house (not to her child), and quick as a flash she was turfed out, it was sold and that was that.