Signing house over the children

[kookahhh]

Hello

I'm looking for advice to see what my mum would need to do to sign her house over to her two children, myself and my sister.

This is at her request. All of my gran's money went to pay for a care home and mum wants to avoid that.

I know it's a tricky subject, but I also know loads of people do this because I work for social services.

Mum is 76 and has had a hip replacement but has no current care needs or significant health problems that would suggest she'll need care at the moment.

I live nearby and plan to make sure she never needs to go into a home by helping out myself if needed, (sister as well but she lives a bit further away) but I know that sometimes even with the best will in the world that might not work out in some cases.

Thanks all.

Surely your DM wouldn't let you and your sister run round after her juggling your jobs and families to see to her needs as she becomes old and frail. Would she??!!
I can't believe any decent parent would let their adult DC do that!
Much better to pay for care as needed, it's what we all 'scrimp and save' for all our lives, and let our DC enjoy the prime of theirs without the stress of elderly care needs.

Different LA's obviously so things differently, ours current asks about any transfer of property since 1997. They are not just looking at if you had a care need then. The Care Act states deprivation is a deliberate attempt to avoid paying care fees which this is!

You need to take professional advice

@cptartapp That’s a genuinely interesting view... I don’t have parents so never had the chat with them, but DH’s parents have been very vocal about not wanting to go into care, and wanting to stay at home. MIL’s mum died in a care home in 2019, and that started a lot of awkward conversations about them not wanting to end up in the same place.

Although they never got to talking about what they wanted to happen instead.

It won’t avoid IHT as mum will continue to live there so it’s a gift with reservation of benefit- a GROB. CGT is the big disadvantage- payable when asset is not main home (as it won’t be, for the child). If child buys property extra 3% stamp duty. Lots of downsides actually , all for the chance that you won’t have to find care. The CGT could outweigh that after a few years...

I know someone whose parents did that. They were very pleased with themselves and advised all their friends to do the same.

Unfortunately about five years later one of their sons’ 20 year marriage exploded pretty spectacularly.

The value of the share of the parents house was worth more than the equity in the family home so their son effectively had to give his ex wife the house and all their savings to prevent his parents losing their home. He now lives with his parents aged 46. It’s a total mess.

So basically, OP, your salary is not huge, as otherwise, a house of not much value wouldn't be of great interest to you. If you don't earn a lot, you don't pay a lot of taxes either. So you are basically planning for other people to fund your mother's care with their taxes. You feel entitled to other people's money

OP - ignore the comments about the state paying for your mother's care and not you. So it's ok for care homes to be owned by private operators who charge ridiculous fees sufficient to make them large profits (and buy their range rovers) but not ok for a family to try and hold on to their money. It's the system that is broken. Keep the asset and look after your mum in her old age. Win win.

That would only be fair if the rest of us could stop paying taxes and could keep the money for our families

@ClarasZoo

It won’t avoid IHT as mum will continue to live there so it’s a gift with reservation of benefit- a GROB. CGT is the big disadvantage- payable when asset is not main home (as it won’t be, for the child). If child buys property extra 3% stamp duty. Lots of downsides actually , all for the chance that you won’t have to find care. The CGT could outweigh that after a few years...

This plus the whole piece someone else raised on what happens if you/your sister divorce or go bankrupt. On the stamp duty point, you will pay stamp duty plus 3% more as second home on the market value of the property, even if money doesn't change hands.

And it's completely morally wrong (we should be redistributing wealth not thinking we're entitled to an inheritance we've not earned) but you've made it clear you don't agree with that. I also acknowledge the super wealthy do much worse (although they probably do pay private care home fees).

I do not want my hard earned and slooooowly earned assets to be burned through at lightning speed by care fees. I do not believe the standard of care differs enough to justify it. I want my assets to go to my DC, just as the OP's DM does.

So you want my hard-earned taxes to pay for you, so that you can fund your children's inheritance? How selfish.

We cared for dementia ridden grandfather at home. I say we but it was the grandkids who did it as my parents were already too old to do it properly. You haven’t said how old you or your kids are but if she lives another 20 years which is possible, you need to consider who would be providing home care.

self funders will be in some cases paying double what the council funded residents will be 'paying', to live in the exactly the same care homes with the exactly the same care facilities, I understand why many people do this.

The advantage of self funding is, of course, that as soon as you decide that you want to go into care, that's it. All you need to do is to find a bed that is available.

No asking for social services assessments, no waiting for the wheels to turn be it ever so slowly.

DF saw a doctor in Thursday, decided he could no longer look after DM that evening. We called local homes on Friday, on Saturday he moved for a trial. Came back home on Saturday (!) and was back in the home on Sunday evening

It was a horrible time but made so.much.easier because it was absolutely in the control of the people paying.

A small mercy at a very difficult time.

So you think that your mum should have free rent/ electric/ cleaners/ laundry/ meals/ council tax/ not to mention her actual care etc. paid for by the tax payer because you want her house?

So you want my hard-earned taxes to pay for you, so that you can fund your children's inheritance? How selfish.

My hard earned taxes are paying for the people who currently need care. I don't resent it, and I don't consider them selfish for trying to preserve some inheritance for their DC.

As previous posters have said, the ability to pass inheritance to the next generation is a big driver of working, saving and being financially sensible. Why pay off a mortgage if it will all go in care home fees? Why save? Why not spend it all?

In Ireland this is recognised as obvious, and there is a fairly modest cap on the amount that can be consumed in care fees.

@claracluck1978

I'm sure if OP and other people planning on doing this were asked about wealth gaps widening or narrowing over generations they would mostly advocate narrowing of the gap; however see no problem with doing everything possibly to avoid paying for their own family needs.

Sorry, it's selfish. Nobody has a right to an inheritance.

Exactly this

I think you’d have to see a solicitor to sort it out for you and advise both parties of the pros and cons.

For care costs it's called deliberate deprivation of assets - definitely some professional advice needed.

If she's still living there rent free it would be a gift with a reservation of benefit for IHT unless she was paying full market rents - but sounds like that's not your aim anyway.

@Mumoftwoinprimary

I know someone whose parents did that. They were very pleased with themselves and advised all their friends to do the same.

Unfortunately about five years later one of their sons’ 20 year marriage exploded pretty spectacularly.

The value of the share of the parents house was worth more than the equity in the family home so their son effectively had to give his ex wife the house and all their savings to prevent his parents losing their home. He now lives with his parents aged 46. It’s a total mess.

Ouch!

My (wanker) BIL has done this. His parents have signed the house over to him and his sister. He now boasts about owning 2 houses. It has been done for the sole purpose of avoiding care home costs should they need residential care.

Frankly I think it's piss poor. Those who have the money to pay for their care should do so.

It’s a really difficult issue. There have been various consultations over the years, one of the most sensible ideas was to have a cap on how much an individual pays for their care after which assets remained in their ownership. Can’t remember how much but it was around £100,000 I believe. It does seem unfair that under present rules your care costs will take everything apart from £23,000 ish. A larger amount left for parents to leave their family seems fairer. If you have worked hard and been prudent all your life it is very galling to see those who have not been as sensible being financed, albeit with possibly less choice of care facility.However as posters have said, often self funders are in the same homes as those who are paid for by the LA and in fact are often subsidising the reduced fees the Council is willing to,pay.

Boomers gonna boom.

My parents did their will so that they owned it 50 -50 when my mum passed away her half went to my sister and my son with my dad having a lifetime interest and the right to stay in the house .
He may need to go into a nursing home shortly as he is in hospital at the moment but if this is the case only his half can be touched for his care fees .
This might be a more reasonable option as your mum is still paying for her care but you still get some form of inheritance if it can be done so that you only own half of the house .
Only thing I would be worried about is if you divorce as your 1/4 might be taken by an ex
Although if it’s done properly with a trust it may work

@HauntedPencil

For care costs it's called deliberate deprivation of assets - definitely some professional advice needed.

If she's still living there rent free it would be a gift with a reservation of benefit for IHT unless she was paying full market rents - but sounds like that's not your aim anyway.

This

Is your DMum going to pay you the full market rent?

Safest course of action is for her to move out when she ceases to be owner. Because when someone stays put, then investigation for deprivation of assets is very likely. And it simply doesn't matter how long before care costs are required she ceases to be owner.

You to take legal advice

The pitfalls are significant, as is the cost of getting it wrong

My mum my uncle paid my grandparents mortgage for years but foolishly didn't have anything legal regarding any ownership of the house so when there was just Gran left and she had to go into care mum and uncle never got their money back which has been their intention. Gran lasted almost exactly to the £23000 threshold bless her.

My mum is very resentful about this even though it was her fault for not getting anything official. This is why she wants to do this.

She's heard me talking about this re work and the numbers of people who do it and announced she wants to do it too.

I respect opinions but none of you know my circumstances or why my mum is so keen to leave her kids the money. Don't assume I sitting pretty in a big house of my own. To the PP suggesting in low paid and contribute low tax, I pay plenty of tax thanks.

My life is actually pretty shit at the moment and not because of COVID etc.

Perhaps we should all up and move 5 miles over the border to Wales where social care in your home is capped or to Scotland where it's free? There's no fairness in any of this in the UK.

Is it fair that my friend who moved into her mums for a year to care for her has just had the property discretionary disregarded - house is worth £1m. Fair to her I'm sure.

It's all skewed!