Putting house in trust for DCs

[supersop60]

My DP is worried that our DC will never get on the housing ladder. There will be no money from grandparents (mine both died 30 yrs ago, and his took out equity release on their house which needs to be paid back on death).
DP is convinced that putting the house in trust for the DC will ensure that they definitely inherit, because we won't have to pay care fees.
I don't think he's correct. From my own research, it seems that councils can go back any number of years and look for 'deprivation of assets' and take the money anyway.
Any advice?
Edited to add that we're having a Zoom call with a solicitor tomorrow, and I can tell that DP is desperate to get this sorted asap.
I'm 65 and he's 61

When one of you dies you just ensure in your will that DC inherit that 50% and then the next 50% once the other one of you dies

An Auntie of mine put her house in trust for her dc many years before she went into a care home. She was in the home for 5 years before she died.

What followed was three and a half years of the most awful, stressful experience with the Council trying to claim back the cost of her care from the house sale due to deprivation of assets and her two dc fighting it. Three and a half years. It pushed both of my cousins to the absolute edge. In the end, although they 'won', no costs were awarded - and about a third of the value of the house ended up in the Solicitors' pockets anyway due to astronomical fees. It was actually more than if the full fees for her 5 years in the home had just been paid.

I wouldn't put any faith in a Trust doing what it's supposed to. They're absolutely full of holes and wide open to challenge ime.

So no mention of a trust is needed?
I think we have to change whether we are joint tenants or tenants in common - can't remember which way round it is.

My parents did this. Their wills say/said that they each leave their half of the house to me and my sister.

Our dad died a few years ago and so technically DSis and I own half of the house between us. Mum no longer lives in the house but rents it out (and all the rent goes to her). If she goes into care, only her half of the house can be taken into account but I'm not sure what would happen in regard to CGT. Obviously mum would have to pay it but I presume DSis and I would also have to.

We have family friends who did this. Put the house in the children’s names. Were very pleased with themselves about this solution and advised all their friends to do similarly.

Until one of their children ended up having the most awful divorce. The ex wife (who was usually lovely but their son had behaved shockingly badly so she had huge amounts of justified anger) went after the share of the house. Their son basically had to give her pretty much all of their joint assets to stop her coming after the parents’ home.

I wouldn't advise putting your house in your DC names whilst you're still alive

This only really works if you're a living married couple to leave your 50% to your DC as yes council can only take funds from remaining 50% belonging to living person to pay towards a care home.

Only a small % of people actually go into a care home

Only about 11 per cent of over-85s are in care homes. Under 3 per cent for over-65s (Office for National Statistics)

If you live in the house you don’t own or partly own you have lost control of it. The trustees control it. HMRC must be informed. It’s expensive and if the estate is under £1m it’s not really worth it. No IHT at the moment for last surviving partner. I would look at pros and cons. It’s not clear cut.

I would look at pros and cons. It’s not clear cut.

Hence my asking on here.

Be cautious about doing anything to avoid care home fees for the purpose of inheritance. If my own parents need care at the end of their lives (only a minority do. Most people stay at home and die without ever needing a care home) then I would far rather they spent every penny of their assets on ensuring they get the best quality of care and have everything they need rather than putting up with the most basic level that's the cheapest the local council can get away with. I would not want to inherit more at the expense of my parents having a more uncomfortable closing chapter to their lives.

@PokerFriedDips thank you. Our only worry is that the DC will end up with nothing, and therefore struggle. I'd rather be uncomfortable, and see them be ok!

@supersop60 You think this is the best forum!? Not a financial adviser who knows all your financial assets and earnings etc? Just randoms on here who don’t know what other money you have? The cons are cost, lack of control, loss of an aset and possible tax implications. No one here can say what these might be, and how much they matter to you, as they don’t know your circumstances. Is the house all your assets or 1/4 of them?

What you are doing is ceding control of what might be your biggest asset. So no borrowing against it or deciding to sell it. It won’t be your decision. This might not matter but no one here can advise whether this is wise or not. Hence someone who knows all your financial affairs is the only reasonable source of info for decision making.

So what will you do if you need care?

We have done this. Our house ownership is tenants in common. When one dies their half goes to the DC with the remaining partner allowed to live there or move and buy another house.
We recently updated our wills and the solicitor advised us this was still the best recommendation.

I don't think it's a good idea to transfer ownership while both still alive.

Two points to consider:

1. The current government is planning to re-look at Trusts vis a vis inheritance tax
2. Councils have no limit on how far back they can look when investigating/clawing back care costs in suspected deprivation of assets cases

I am thinking of putting all my assets into a trust with named beneficiaries, but have been advised my my IFA to wait until the Spring Statement on 26th March to see if that strategy will still be tax efficient.

If Trusts and pensions etc become subject to IHT, be assured that any following Conservative gov't will keep it.

Instead of waiting 20-30 years for you both to die, while trying to cheat society of taxes or paying for your care, why not just give them the money now?

A deposit is worth far more at 30 than it is when you are 60.

it's probably better to get married so you have the full inheritance allowance

Do you think this is the best forum!?
Just canvassing opinions and experiences.

This is my point to DP.

And what was his response?

Yes they can go back years, but as long as you’re both healthy at the time you may give away your house, the local authority won’t be bothering to chase anyone about deprivation of assets.

We would love to do this. However, we don't have spare cash, so there is no 'bank of mum and dad'. The only help we can offer them right now is to not charge rent, so that they can save.
The only asset we have is the house.

He thinks the council will pay.

All those people desperately trying to avoid paying for care by playing the system, who do you think is going to pay? We’ve taken collective leave of our senses in this country - want champagne health and social care on lemonade taxes. It’s insane.

How old are your DC? Remember they could end up being better off financially than you in due course due to good jobs, promotion and so on. Are they still living at home and is that the issue?

I'd leave them the house as mentioned above, and get on with your lives and let them get on with theirs. That's more than enough IMV. Everything else is too complicated and fraught with taxation and other difficulties.

@supersop60 They might not remotely be relatable to you though. Your circumstances! It’s definitely a big unknown at the moment in terms of future taxation. If you have no assets other than a house, you won’t be able to downsize easily. You are also looking at major changes to avoid costs you might never have. It’s important to understand all your tax planning and giving money (not your house) to your dc to help them is better when they need it. Not when they are much older. So can you save for them and set them up with a house deposit? What about uni costs? You have a lot to consider.