Dad wants to sign his house over to me

[dawny_blue]

my dad is 70 soon and wants to sign his house over to me, also put his bank accounts into his and mine joint names (he isn't married). is it complicated to sign a house over and what implications will it have on me and tax purposes

He has not made a will but intends to do a DIY one, the house is only worth around �100k and I have no brothers or sisters

he wants to do this so in the event of his death things will be simpler for me

[Ethel]

I'm more worried about the implications this could have for your dad.

If you were to divorce or go bankrupt the house and bank accounts would be counted as your assets with possibly dire consequences for dad.

As he has no wife and you are his only child, you would automatically inherit everything if he died without making a will.
However a straightforward DIY will will speed up the process.

If you do decide to go ahead with your plans, unless dad has substantial savings so half of the interest would push your income into the upper tax bracket there will be no tax consequences for you. But interest on bank accounts is taxable, so there will be more tax to pay as your tax limit is lower than your dad's.

[dawny_blue]

thank you very much for that Ethel, I think the idea behind the house being signed over to me was in case he ever had to go into a home then it wouldn't have to be sold off. I will speak to my dad and maybe just go with the will being done instead.

[warpig3]

Dont quote me on this but I think if your dad signs the house over to you it must be yours for 7 years while he is still alive and living there otherwise the govt can make a claim on it if he goes into a home. Hope I am wrong but check it out.

[Ethel]

warpig is right. But it flummoxes me that elderly people and their adult children seem happy with the prospect of the parent perhaps having no choice whatsover about the home they end up in, perhaps for years, rather than using their assets to pay for a home of their own choice.

I am well passed retirement age and already have a list of homes I'm prepared to go to, should the need arise.

[dawny_blue]

Ethel, we obviously haven't given this enough thought (thank goodness I came on here) I hadn't thought about my dad having to go into a home maybe not of our choice because the government were paying. I'd rather the house was sold to pay for a nice 'home' for him if that ever occured. He insists he'll live till gone 90 and won't ever need to go in a home (he is extremely fit and healthy) but I would also like to insist I'm very happily married and will never divorce! we just don't know these things in reality do we. thank you very much for making me see this in true light, my dad's welfare, comfort and happiness is more important than making sure I don't lose the house as my inheritance! I am very grateful

[Ethel]

I wish you are dad well, dawny_blue. Old age can be frightening, but much eased by a loving family.

[taichiperson]

Dawny, you never know what is going to happen - my father in law sold the house to us (we all lived together) for a low price. The lawyers were concerned that we were not doing this to dodge having to sell the house if and when he had to go into care. He was fit and well - ate healthily and exercised regularly (fell walking and cycling). Around his 80th brthday he started having hallucinations, and was eventually diagnosed with dementia (Lewy Body,not Alzheimers). It was distressing for all of us as he deteriorated, and eventually he needed 24 hour care which we could not provide, as we had young children. We were very lucky in that when he went into care we never had to pay a penny, but had he been taken ill a couple of years earlier we would have lost the house. I am not sure what the law is now, so I would advise you to consult a lawyer if you want tot go through with it. Have you also considered power of attourney if he ever becomes too ill to look after his own affairs? The law has recently changed, so again you need professional advise but it is very much worth it, if only for peace of mind.
I wish you luck, and hope your father stays in good health.

[taichiperson]

Incidentally, we did have the choice as to which home he went to, but this might not be the case in all parts of the country.

[dawny_blue]

thanks for that, that's given me a little more food for thought!

[VillageVicar]

Ethel: Do you know how this affects inheritance tax? I vaguely recall reading an article that said if the home is transferred in year one, once year five passes, there is no inheritance tax that the government can collect.

A single friend placed a home in trust for my children, granting her the right to live in the house in perpetuity, but ownership resting with the trust, to be transferred equally to the children when they turn twenty-one. I wonder whether something along those lines might apply and be written with the appropriate codicils to protect the recipient in the event of a divorce (or any other shared asset scenario such as bankruptcy, litigation, etc.)

Fr Bill

[dawny_blue]

that's interesting, it's starting to get a little complicated for me now!

[VillageVicar]

Apologies Dawny: I feel your father's gesture is lovely and I'm sure it's done to ease burdens on you. In fact, his thought on this may have come about from a recent publcation from Age Concern addressing matters of inheritance taxes. The phamplet has recently been revised. I could be wrong, obviously. But learned individuals such as Ethel raises other questions indeed. It may be, however, that your father has other assets to assist him with long-term care, should he require it.

I find myself saying all to often: 'Be nice to your children: Remember, they're the ones who get to choose your nursing home!'

Be well

Fr Bill

[warpig3]

Dawny-blue, inheritance tax will not apply in your fathers case as the value of the property falls under the tax limit (unless of course he has a few hundred grand stashed away).

[PrinceRainie]

If the house is placed into trust or gifted to a son etc and the settlor (person placing house in trust) continues to live in the property, then this creates a "gift with reservation" and can effectively defeat teh whole objective of placing the house in trust in the first place as IHT could still be payable. Unless the settlor pays the full market going rent for the property to the son (which then has knock on effects to the son as the additional income will be taxable and may take him into a higher tax bracket).
But from what Dawny-blue has said it seems unlikely that his dad exceeds the $600k IHT threshold therefore this isnt really an issue. Just the fact that the local authority may still insist on the house being sold in order to cover potential costs of nursing home fees.