News0 min ago
signing over a house?
a lady we know has a son who wants her to sign her house over to him in case she gets alzheimers later in life.she mentioned something about 7 years.i dont know what it means,but does he have to wait 7 years until he can claim the house and her money? thanx.
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If someone makes a large gift then dies within 7 years it could be subject to inheritance tax.
If she signed over her house it's his. He could sell it the next day.
Remember Princess Margaret signed over an island in the Carribbean to her son, Lord Lindley. He promptly sold it. She should be careful.
If she signed over her house it's his. He could sell it the next day.
Remember Princess Margaret signed over an island in the Carribbean to her son, Lord Lindley. He promptly sold it. She should be careful.
If the lady was to die within 7 years of the transfer of the property, all or part of its value would count towards the total value of her estate when assessing the liability (if any) for inheritance Tax. After 7 years had passed, the value of the house wouldn't count towards the value of the estate.
However the foregoing only applies if the lady gives the house to her son 'without reservation'. If she continued to live in it she'd have to pay rent to her son (at the current market rates) or else have the house still count as part of her estate, for IHT purposes, when she died.
http://www.hmrc.gov.u...-home-to-children.htm
Many people believe that the '7 year rule' also applies when giving away their home in an attempt to avoid potential care home fees. That's not the case. Local authorities can go back for an unlimited period of time, still counting the home as part of the care home resident's assets, if they believe that an attempt has been made to 'beat the system':
http://www.direct.gov...CareHomes/DG_10031523
Chris
However the foregoing only applies if the lady gives the house to her son 'without reservation'. If she continued to live in it she'd have to pay rent to her son (at the current market rates) or else have the house still count as part of her estate, for IHT purposes, when she died.
http://www.hmrc.gov.u...-home-to-children.htm
Many people believe that the '7 year rule' also applies when giving away their home in an attempt to avoid potential care home fees. That's not the case. Local authorities can go back for an unlimited period of time, still counting the home as part of the care home resident's assets, if they believe that an attempt has been made to 'beat the system':
http://www.direct.gov...CareHomes/DG_10031523
Chris
There's a legal procedure , I think it's called 'power of attorney', where you can nominate someone to look after your affairs if you become mentally incapacitated.
The lady would still have control of her affairs, and her home, while she still had her wits about her. She's need to see a lawyer to set it up.
The lady would still have control of her affairs, and her home, while she still had her wits about her. She's need to see a lawyer to set it up.
Sandy - My Mum and Dad have just done this in fact ive got to read the paperwork tonight. My Dad has vascular dimentia and within the next couple of years he will need to be in full time care. The power of attorny cost £1000 to set up but the Solicitors have assured us that by doing this there is no way the house can be sold to pay for my Dad's care.
You don't need to involve a solicitor in order to set up a Lasting Power of Attorney.
Everything you need to know is here:
http://www.publicguar.../arrangements/lpa.htm
Chris
Everything you need to know is here:
http://www.publicguar.../arrangements/lpa.htm
Chris
The people concerned should also enquire about gift tax. Certain valuable gifts can be taxed at 40 percent, so make sure this house is not liable to gift tax. She might feel safer if she made over only half of the house, with an agreement to be signed by the son that he would never force her out of the house (say) into a home so he could move his own family in and just forget about his mother.
Can happen.
It is not likely that half the value of the house would ever be worth enough to come in for inheritance tax after death, unless there are other considerable assets as well
MUST get a lawyer, or at least the Citizens Advice Bureau to advise.
Can happen.
It is not likely that half the value of the house would ever be worth enough to come in for inheritance tax after death, unless there are other considerable assets as well
MUST get a lawyer, or at least the Citizens Advice Bureau to advise.
There used to be though - when I worked in insurance we used to sell a 6-year policy called Gifts Inter Vivos - to cover the fact that gift tax (or whatever it was called) was payable if a person died within 7 years of gifting financial assets to a family member.
However as is said, Lasting Pouwer of Attorney would be the much better option in this case, the lady gets to keep her house until she is diagnosed as not being able to manage her own affairs.
However as is said, Lasting Pouwer of Attorney would be the much better option in this case, the lady gets to keep her house until she is diagnosed as not being able to manage her own affairs.
Here you are, it's to do with Inheritance tax http://www.giftintervivos.co.uk/
I thought gift tax rather obviously meant IHT and Capital gains
and posters have been a little unfair
She really needs to take advice on this: if she goes on liviing in it rent free the transfer will be invalid for some purposes and valid for tax purposes
for example if she transfers it a month before going into care,
then, it will be still be deemed as hers for charging purposes -ie paying for her care.
and posters have been a little unfair
She really needs to take advice on this: if she goes on liviing in it rent free the transfer will be invalid for some purposes and valid for tax purposes
for example if she transfers it a month before going into care,
then, it will be still be deemed as hers for charging purposes -ie paying for her care.
Not just inheritance tax rules you have to watch you don't fall foul of - even if the person's savings and assets are under the IHT threshold and they need to go into a care home or nursing home permanently, the value of the house will be taken into consideration after 12 weeks in assessing how much they pay for care (of, course, if house transfer happens more than 7 years before such a scenario it wouldn't be a problem then). Hope this helps.
You can give away £3k pressies to as many people as you like without any questions over that - any more is viewed as deliberate asset deprivations and would therefore be counted as still under the control of the gifter in all sorts of "means tested" situations. That;s only £250 a month btw - so I suggest that the gifter sets up an S/O rather than gifting the amount in a lump sum once a year - this might disguise it easier if nothing else.
Power of Attorney will not stop the house being sold to pay for care. If only one party needs care they cannot force sale of the house during second parties lifetime but can take half of savings and half of a private/company pension towards fees. The 7 year rule is for IHT purposes only and will be ignored for Care Fees, It will be seen as trying to circumvent rules and will probably have to be sold unless other funds are available.
It would be a good idea to speak to the NHFA, although they will try to sell you one of their products theyb are specialist on all aspects of care home fees. I found them extremely useful and very helpful.
It would be a good idea to speak to the NHFA, although they will try to sell you one of their products theyb are specialist on all aspects of care home fees. I found them extremely useful and very helpful.
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