Protecting dc s inheritance

[Travelplease]

As identified in earlier thread , we dont have massess of savings .
we own the house and would like to pass this on to dc .
if we get frail and need care homes then the house would have to be sold to fund this .
is there a way that we can sign over house to dc ?
or even sign over a quarter each , so that if we ho in care at least some-of the money can go to dc ?
they are both working hard and we wd like to leave them something .
i feel guilt about asking this as i am aware it would be to help the dc and not lose the house for care fees. However, apart from child benefit neither of us have ever claimed any benefits ever .. which i am using to salve my guilt somewhat / ish .. with this plan .

As far as your children inheritance, honestly, I wouldn't worry. The average age to inherit in the UK is 61, it's not giving young people a start in life as often portrayed.

Or even if they weren’t so inclined but got divorced / went bankrupt / owed large sums of money and their creditors forced a sale.

It's morally wrong and won't work.

Surely your children wouldn't allow this? Would they??!!
I would think far less of them if they did.

Yep, that too. And that's before they even take into account a council investigation into when and why the house was signed over.

Bad idea, OP.

And presumably if you are living in your children’s house you will need to pay rent to them as they could be taxed as if they are receiving market rates of rent on their property

If you handed the kids the house now and they decided to sale it after death, they would have to pay CGT on any gain from date of gift until sale at their joker tax rate eg 20 or 40 or 45%. Without the ‘gift’ your estates are under 2 million you and husband can leave a house fee of IHT and CGT up to 1 million. So your plans might land then with a large CGT bill.

DH and myself both have previous marriages and adult children. We are tenants in common, which means that we each own half. If either of us has to go into care, only the half belonging to the person in care can be used for care home fees.

CGT on UK property, the rates are either 18% or 28% depending on your other income in the tax year of sale.

Divorced
occupational pensions as teachers
2 homes

There is nothing left after 6 years each needing care
Pretty average really- say homes worth £400k each (less than national average) , they had about £100k in savings and about £20k pension each a year

Thats £1.2 million

I stand corrected. This is correct for the time being but highly likely to change in the next budget to simplify tax and bring it in line with income tax.

Sorry this was meant to reference my post on CGT.

What others have said. Are you asking if you should dodge the system to leave your kids something and get the state to pay for your care as all your life you have not claimed anything?

You may or may not be reasonable. The middle earners are the most screwed in British society. Not wealthy enough not to care and ride all the storms but earn enough so they don't get anything for "free" their entire lives whilst some get everything paid for

My parents have set up the wills so children inherit their half of the house if one person dies first but can't get it til the other passes. Obviously it won't help if they both need care but it increases the chances of receiving something.

You can sign the house over but you can't then continue to live in in for free. You would have to pay your kids the market rate for rent. You would also have to live another 7 years or the council can take the house anyway. Basically whatever strategy people can think of to avoid losing the house, the council have thought of it.

Recently went through this with my mother.

For us the only way we could avoid care home fees was simple but hard bloody work..

My parents were luckier .. grandpa put his house in my parents names and died 20 years later at 98... they sold the house and despite capital gains were able to pay off their mortgages..

My dad then died and left my frail mum unable to live alone but with a house worth !700k.. My siblings agreed to buy my rented house off the landlords outright and with the excess convert it into a place with a granny annex..

Without the rent I was able to retire with an income from the estate for the care I provided.. but fuck me it was hard ...

She died last year after 4 years hard work.. but I had protected their inheritance..

We added to my bungalow and I got the difference for my years of caring and they got what they would have done.. I was able to buy a small home out right and my siblings got £75k each ..

You could give them your house and move elsewhere. Or downsize and give them cash. But if you give them your house while you continue living in it, not only will they be taxed as if you’re paying rent, but if you need care the council will know it’s deprivation of assets and will take the house off them.

Having just viewed 10 residential and nursing homes I have to say a lot of the cheapest ones (the ones the OP will move into if he/she needs one) are not great
Exactly this. Don't you think you will deserve, and want the best care you can have if the time comes. Being in care doesn't mean just about dead. You'll still want the best you can get, be it a nice view, staff that do more than they have to, a garden, activities, great food etc...

I've raised my kids to be self sufficient just as I was. If my parents go to care, their home will be sold so they get the best last years. I've got a home and good life. How could I enjoy more luxuries to deprive my parents of it.

If you raise your kids well, they will feel the same and want the best for you to be paid by funds you earned.

A couple of options.
If you are Tenants in Common, rather than joint ownership, you each own half of the house rather than owning the whole jointly. If only one of you requires care fees, half of the value of the house will be protected. You can switch from own type of ownership to other by arranging it with a solicitor.

Releasing assets from the house now to spend on whatever you choose such as monetary gifts to family- via an equity release scheme. They are much more flexible and transparent than in the past, with clear protections and safeguards.

I'm not advising either of these options - but they are possibilities, if your aim is to protect or release your asset.

Honestly, the moral outrage on this thread is ridiculous.

Several points to bear in mind:

1. You could potentially look into ways to transfer your property to your children. For example, would you be entitled to some form of sheltered/social accommodation if you didn't own a home (this is more common in some areas of the country, or if you were ever in the armed forces, or clergy etc). If so, and if you were living in said rented accommodation for decades, the chances of any local authority considering any deprivation of assets would seem unlikely (though never say never). However, I'd suggest taking legal advice.
2. The notion that the care home that a local authority puts you in is somehow far inferior to others is a myth. Most care homes will have one rate that they accept from LAs, and another rate they accept for private residents. Very often, someone will start out self-funding when they first move into a care home, then when their assets fall under the threshold, the local authority will have to take over the funding, which is generally at a negotiated lower rate.
3. Why should people with a medical condition - for example dementia - be forced to sell their assets to pay for care, when other medical conditions (cancer etc) are covered by the NHS? This seems grossly unfair.
4. I will absolutely be looking to go down the assisted suicide route if I ever get a dementia diagnosis to ensure my assets go to my children, not to keep me alive in a state that I'd not wish on my worst enemy.

Tenants in common instead of joint tenants. Doesn’t cost much to do.
That way you are protecting half the house at least. If both of you need care homes it won’t make any difference but it might if only one of you needs it.

This is what we have done.

Deprivation of assets.

I know one bloke who signed the house over to son, who then defaulted on mortgage & he was evicted.

Worse, neighbours sold their house to son, who charged them market rate for rent. Caused a family stooshie. Now selling it for far more, they won't see a penny.

My in-laws have been paying into a scheme, I'd rather the cash was spent on my mil, who really needs care now

Your DC might be the nicest people in the world but they can make their own way, look after yourselves.

Don't get involved in dodgy schemes.

Setting aside the moral issues, have you any idea what "care" looks like now, never mind when / if you are old and frail? The allowable cost varies from one area to another and often only funds the lowest / least desireable care homes or provision. Assuming there are even spaces in those facilities, given the demand for places. Is there something in the air that makes you think that is going to get better? So if you do this, your kids are going to be happy to fork out for the gap between what (if anything) the state pays at that time and decent care facilities? Or they are instead going to step up and look after you themselves? Have you got all that in writing and legally binding?

You've worked hard to provide a decent start for your children, but have little in savings and just a house to show for it. Are you sanguine about spending your twilight years in the future equivalent of the poor house, just so your kids can inherit something they didn't work for?

And if you think this is being alarmist, my colleague is currently looking for a care facility for his elderly frail mother who cannot stay at home any more (and doesn't own her home, so no assets). The amount the local authority will pay for this will only fully fund two possible facilities anywhere within 50 miles, both of which have long waiting lists. The only facilities that have vacancies require topping up, and since mum has no assets, he and his wife will have to pay extra every month for her to go to one. Or dump her on social services who still don't have any spaces, so she will end up "wherever".