deed/mortgage question

[flaks]

I am about to buy my first flat. I grew up in care and am quite late getting on the property ladder. I also feel that I am less aware of the whole process than I should be. My sister is disabled and lives with me (she can only work sporadically and her condition has deteriorated). I would like for her to be on the deeds: is it likely that this would be allowed when she is not on the mortgage?
I am wondering what other measures I could take.
I would make her the beneficiary of my will (including the property): would she be liable for inheritance tax if she is not on the deeds?

what advantage would having her on the deeds be?

you’d just be giving her that percentage of the flat, and she’d have to agree to selling it any other decisions, and you’d be obligated to pay her her share if you did sell.

if she is ill is she ever likely to not be able to make her own decisions? That could absolutely handcuff you as you wouldn’t be able to do anything with the flat.

iht wise unless the flat is over 500k you can leave it to her with no IHT.

i would keep it in your name, draw up a will leaving it to her. That way you keep control of your asset.

Speak to a wills and probate solicitor about setting up a trust for your sister. She’s highly unlikely to be allowed to co-own if not on the mortgage but you can still leave your flat to her.

I would keep it simple with just you on the deeds and mortgage. I would make out a will leaving the property to your sister as the beneficiary.

You could also talk to your solicitor about putting it in trust for her.

Agree with the comments. Unlikely your sister will be allowed in the mortgage and thus make it hard to be in deeds as well as the bank can refuse the mortgage. The fact that your sister is your de facto dependant may also weight on your mortgage application. Best course of action is to leave your sister out of the mortgage/deeds and set up a trust with her as beneficiary. Depending on the size of your estate, a will might be just fine. Speak to an advisor to set up the best course of action.

Also, congrats on your flat!

Thank you @MH0084 I'll be pleased (stunned!) once it all goes through. At the moment I have had an offer accepted.
I agree that the deeds could be a complication so I shall make sure to leave it to her in my will instead. The flat is well below that IHT threshold. I have life insurance sorted and my estate will not be worth a great deal (though I may make some enquiries about the need for a trust).

The estate would need to be worth less than £325k to avoid IHT. There's no residence nil rate band for property inherited from a sibling

Don't put her on the deeds. Leave it to her in your will or if there is any reason she may not be able to make decisions for herself (not sure on the nature of her disability) then leave it in a trust but you would need some trusted people to be trustees.

Thank you @spannasaurus at the moment my estate would still fall below threshold (although I can't guess at future changes in prices/thresholds). I know my situation is slightly unusual.
@Littletreefrog thank you I will have to think about this (in case things change in the future).

I don't think your lender would let her be on the deeds.

I think you are right @ByQuaintAzureWasp it was a sudden thought as I want to make sure she is OK (and would perhaps be nice for her).

You might mess up her benefits if you put her on the deeds. It might be worth looking into setting up a trust fund for her instead? Cerebra, the charity run free online sessions on how to do it.

@Geneticsbunny thank you I'll look into those sessions

If she’s unlikely to be able to work then when you make your will look into a vulnerable persons trust. If she’s reliant on benefits and you leave her a chunk of money then her benefits will all stop which may affect the support she gets.

I was told by my mortgage broker a while ago that if a person was on the deeds they would need to be on the mortgage. They don’t need to be earning though, as long as you meet the affordability threshold on your own.

thank you @TwoBlueFish I'm going to be getting some legal advice about this now I've got some ideas from this thread.
@Icanttakethisanymore good to know: it seems to vary with providers, I'll look into this.

If she is on the deeds, it is an asset in her name. If she needs to go into a care facility in future, your earned money would be considered as hers for funding. It's an illiquid asset and would potentially disadvantage both of you. Very commendable that you are being so kind, but it may have unintended consequences.