Does everyone do this ?

[DoreenCorkhill]

Strange question I guess but my sister asked me last week if my husband and I had signed our house over to our children yet ( DH is 65 in a few weeks so wonder if that prompted the question). She advised me she and several of her friends had signed there homes over to their children in a bid to avoid inheritance tax .
A quick google suggested to me this was not a great idea with more negatives than benefits but just got me wondering am I missing out on some new legislation or reform ? I know IHT had changed a bit bit - but to me it’s like any other tax you have to pay it .

The people I know that have done this have done so to avoid the home being sold for care home fees. One colleague is going through it now with a parent who has been in hospital and won’t be able to return home but they have no cash apart from the house. I’m on the fence about it for these reasons, purely because we are not talking about million pound houses, average house price here is £160k so I understand why people try to protect their children’s inheritance. For me personally I’d be scared of potential divorce like other people have already mentioned but it’s up to others what they do with their assets.

Well, given that less than 5% of estates are actually liable for inheritance tax, it doesn't seem likely that "everyone" will be doing this.

So few estates hit the inheritance tax threshold i can't imagine it is that common. Certainly not where I'm from anyway where house prices are just crazy not totally insane like down south!

I wouldn't ever sign my house over to kids though as there's no guarantee that none of them will end up getting divorced with their spouse wanting half the value and ultimately i would prefer to choose my own care home!

So many people really don't understand inheritance tax (me being one of them until a lovely mnetter explained it)

Princess Margaret signed over her house in Mustique to her son to avoid inheritance tax. He sold it from under her.

In my family’s case it was to avoid care home fees, as you suggest, it wouldn’t have hit inheritance tax thresholds.

This. ^ One of many reasons I would never do this.

Hell
no. That's just dumb.

You need to get actual financial advice rather than listen to unqualified people who can't see the big picture.

As people have pointed out, what if a child marries and divorced? Your home could be a marital asset in dispute.

Potentially speak to a Lifetime Mortgage broker. However you need to be clear on exactly what it is you're trying to achieve and why. What you're doing needs to make sense for what you specifically want. You need to make sure you understand anything you arrange.

There are simpler things you can do such as severing titles too. But really you need proper advice from someone who knows what they're talking about inside out

Just to avoid any confusion this is not something I am considering or contemplating .
It was just the way my sister confidently advised me this was commonplace. Just interested why individuals would consider it .

This. I had a terrible divorce; my husband was one of those 'you would not believe he could do such a thing types ' - it stopped my dad passing his property to me or my sister in case it happened to us again (divorce cost him circa £20k 20 years ago). When everything was settle, years later, I asked my solicitor whether so should transfer my property and he said absolutely not, for this very reason. Saying that, I don't know whether the law has been changed in any way or whether you could state that the capital is purely for your stated person should there be any split.