Downsize to give money to daughter

[LadyOgilvie]

Has anyone here had experience of downsizing in order to give their child/children an early inheritance?

My parents are keen to do this. They are both around 70, and I’m their only child.

They currently live in a house which was meant to be their forever home, but it’s probably too big for two of them. It’s a 3/4 bed house in a desirable location. They are thinking to downsize to a 2 bed flat. They would then give the difference in cost (roughly £600k) to me so that I can put a big deposit down on a nice place to live.

I would obviously benefit massively from an early inheritance, but I feel guilty. They can afford the running costs of their home, and it’s a lovely lovely house. It’s the kind of place that comes to the market once every 40 years.

I am interested in hearing if anyone has been through this, and did it work for both parties?

Please ensure that if they do choose a flat, that it's ground floor, with patio doors onto some safe hard standing.

A first or second floor flat will feel claustrophobic and won't give them instant easy access to fresh air, sunshine and the opportunity to plant some patio pots which can help keep them a little closer to nature than having nothing to tend, especially if they enjoy the garden.

I know a couple who sold their large detached family home in an outer London Suburb, they also sold their car and all their furniture and moved to very central London and bought a 2 bed flat with a complete interior design that didn’t include in their words any fuddy duddy furnishings and gifted their adult children a good amount each from the sale of everything.
Best thing they ever did. They could walk or get the tube. If they needed to drive anywhere further out they could hire a car.

It gave them a whole new lease on life and they had keys to a large garden they could go out and sit in during the summer and didn’t have to maintain any of it.

We have a large house. We won't be able to live here when elderly as the upkeep will be too difficult. Hoovering the kitchen took me 50 minutes this morning and i'm reasonably fit. I won't be buying a flat, but a smaller house or bungalow on a level situation would be ideal.

Your parents are sensible and generous to be thinking of such things now. On what you have described it is difficult to see that this would be a deprivation of assets but even if it is all that means is that you will need to step in and help pay for their care when they run out of money. With a new property worth £1m this seems an unlikely situation.

They need to survive for 7 years for the gift to be disregarded for iht purposes. It tapers up to the 7 years and given
Iht is payable at 40% this is a no brainer to me.

Some weird views on here a about flats. I can't comment on the financials but I have experience of parents moving into a flat from a much bigger home. It was a first floor flat in a new build development (bought off plan). It's been perfect for them - a good development (a few snagging issues but nothing too bad), very roomy, a lift, a lovely balcony which my mother has loved pottering around on (don't agree at all with a previous poster who advised ground floor to avoid feeling claustrophobic). Very convenient for shops. They were very keen to do this having seen my mother's parents leave it far too late to move from a large home. As it happened my father died quite quickly after they moved and we are all so relieved mum is now there on her own rather than where they were before. They are in a Scottish city - more normal there than some other cities for middle class folk to live in flats.

It does strike me when I hear people going on about downsizing that there is a less of a cost imbalance between 3-4 bedroom houses in nice bits of London and 2 bed flats than you'd expect - you'd think the latter would be much cheaper and often they are not.

Please don't police my comments . You have no right to advise people to disregard other people's opinions especially when its based on personal experience.

It was for very good reason I said that- due to declining mobility in older age, and following a fall when an elderly person can lose confidence, suddenly a walk to the lift to go downstairs from a first or second floor flat is a whole extra layer of challenge that is avoided by being in a ground floor flat to begin with. Plus the benefit of natural daylight. I wish I had known this in advance before my mum moved. And my DHs mum always said she was so glad she chose a ground floor and had doors out onto the communal garden.

the parents can give their daughter all the money and property they own if they want, deprivation of assets would only be an issue if they already had a need for care or an idea that they soon will eg a recent diagnosis.

Is this true? I thought deprivation of care could look quite far back?

Why does everyone want to avoid paying for care though? social services & the nhs is broken now, what on earth will it be like in the future!

I do think in the future care in the home will need to be privately funded.

This is what I wonder too, how do they actually check?

They can’t possibly do this every time someone dies, imagine how much admin that is!

They do definitely pick random ones and over a certain amount to check.

It’s like anything though, you’ve gotta be pretty unlucky to get pulled out. It’s likely to be on par with winning the lottery in terms of odds.

How do you ring fence it if you are married or getting married? I presumed all assets are divided on divorce and you can't just go around ring-fencing savings/income or other assets.

@daisychain01 Not policing your comments - I am just disagreeing with you, based on my own personal experience. Ok? My mother has loved her experience of living with a view and a balcony.

It definitely is in Wales, I work in Social Care Finance and you really cannot legislate to stop people gifting whatever they want to. For example if you gave your children the family home 5 years ago, then found that you needed care maybe after a stroke, it would be far too long ago to go back to the children and request the money, it's gone, end of.

I think that your parents are being really sensible in considering this at 70. My parents moved at 83 and found it immensely stressful and tiring- and they were pretty fit at 83. They said they wished they’d done it a decade earlier.

Our set-up is a bit different but my DM is in the middle of doing this right now.

She sold her larger 4/5 bed home earlier this year and she's bought a 3 bed house with an annexe. She's going to be living in the annexe, and I'm currently selling my 2-bed house to move into the main 3-bed home. We're extending both the annexe and the main house so we should end up with a lovely place which is slap bang next to each other but still separate households for all intents and purposes.

It means I can pop in and see my DM without having to drive across town, and I'm there to help with her care as she needs it. I cared for my DF until he died so I have no issues with being a carer if this ends up being the case. I'm self employed so can easily flex work around her needs, should this issue arise.

It was DM's idea and has been a huge sacrifice but she's adamant that once we've finished all the building and changes, it will give her a much better quality of life.

Re deprivation of assets - my DM is perfectly well right now, and there's no sign that she'll need to buy in care. The idea is that I can support her with daily life - just general stuff that gets harder when you're older - and that will actually reduce the potential care burden. Obviously there are some very extreme health conditions which would be above and beyond the care I could provide, but the chances of that occurring are slim. And if they did, we can prove that avoiding care costs wasn't the reason for the move. We took professional advice and have been told that we're fine. Our financial advisor was very careful to draw up a detailed reasons why letter, setting out the reasons for the move to provide an audit trail, should the decision ever be questioned.

In old age DMIL would stress about getting the grass cut, DM would worry about having change for the window cleaner. Small things became a big deal - downsizing is a good idea.

The appropriate person to take advice from is an IHT and estate planner. However, pp who have advised that this is not deprivation of assets are correct.
It is wise estate planning.
It is sensible for your parents to move into safe, appropriate housing now rather than leave it until they can't manage.

Why are people on MN so odd about living in flats? Why are they all assumed to be small, claustrophobic, dark and poky? I live in a mansion flat in central London. I’ve had it for years and have no intention of moving out of it when I retire. It’s large, light, and has access to a lovely shared garden. It’s bigger than a lot of people’s houses as it has large rooms and high ceilings. I’m a short bus ride or longer walk away from theatres, museums, restaurants and shops. A taxi home is cheap. I think it’s going to be a great place to spend my retirement!

Even more reason to downsize now before they need care . They have 7 years before they may need care otherwise the house will be be used to pay for care but only if BOTH need care. The other is entitled to reside in the home.

€600k will just cover your deposit? Did I read that correctly?

Indeed it is

thread is olddddddd

No matter what the scheme is like, even if you love the house you live in and have nobody to leave your money to?