Transfer of house to children

[ceejay123]

Hello,
my wife and I are both 60ish and are thinking we should put the house in the ownership of our children (3) for obvious reasons. So I'll ask the obvious question What are the pitfalls, the procedure, cost etc etc
Chris

[Ethel]

Pitfalls

Think about what will happen if any of your children divorce, become bankrupt or in serious debt. Their share of the house will be an asset.

You both die within 7 years - inheritance tax.

Capital gains tax.

You both need residential nursing care - you will be considered to have wilfully disposed of your assets and the local authority will either put a charge on the property or seek the monies from your children. They have the power to do this.

In later years you need residential care and have no means of paying for it. You could end up in an awful council home.

Personally, I can't see any obvious reasons for doing as you propose. You should be using your home in your later life (hopefully many years from now) to make your lives more comfortable and enjoyable. Do you really want to be a burden on the tax payer?

But if you are determined, pay for proper financial advice and get trusts drawn up that will limit both your future liability from nursing care costs, your children's liability from capital gains tax and inheritance tax and ensure your home is going to be there for you to live in as long as you and your wife want to.

[bundleone]

You have to trust your children and your in laws 100% as they will own the house and could do whatever they want with it, ie. sell it if they wish,for instance if one of you dies and the other meets a new partner, your children don't want a step parent living with you they can just put you out, be very careful.

[Barmaid]

If you are doing it to save IHT it will not work. The rules have changed over the last 5 years or so so that if you make a gift with reservation of benefit (ie you give your house away but still retain the right to live in it) or give it away entirely but still receive some benefit (pre owned assets) your children will either end up paying full IHT or you will end up paying income tax on its value. Seek professional advice.

[ceejay123]

Hello and thanks for the advice
I will of course be seeking professional advice
Chris

[Annlinda]

Just an observation but my son and his wife are getting divorced after what we all thought was a long rock solid marriage. She owns jointly with her brother the house that her mother lives in. (it was put into their ownership in the same way you are proposing) Anyway my son's solicitor is asking for half her share in this house apparently this is quite usual. Neither her or her brother say they have enough to pay my son so the house may be sold and the old lady evicted.

[imd123]

A couple of years ago my parents transferred their house to my brother and myself.
The solicitor had us all in his office to sort it out. Pointed out that whatever happened (bankruptcy, divorce etc) my parents would have the power to stay in the property whatever. By the way he claimed it was only 2 years before being free of liability. Everyone assumes 7 years but he told us it only 2.
Can't recall cost but wasn't much really.

[ceejay123]

Thanks for that IMD we will be seeking legal advice shortly.
Anything to deny this profligate Government what is not theirs
Ceejay