Transferring Grandmother's House To Her Children To Avoid Care Costs
Hi,
My mother made what I think is an unwise suggestion about my grandmother's future:
My grandmother is in her 80s and lives quite independently in her flat. He is a little forgetful but not alarmingly so, and is physically well for her age.
She has two children, and her will stipulates that the flat is to be sold and shared between them on her death. I, her only grandchild, am set to gain some of her other wealth (modest savings etc).
My mother said she was considering asking my grandmother to transfer her house into hers and her son's name to avoid potential nursing home costs in the future, while allowing her to live there for as long as she wants to.
I am quite uncomfortable about this. I believe local authorities are allowed to go back as far as they like when investigating deliberate deprivation of assets. My mother is also married. If that somehow didn't work out, I believe her husband would have a claim on her flat.
I find the whole thing morally and legally dubious. Am I right to feel this way? Thanks in advance for your advice.
My mother made what I think is an unwise suggestion about my grandmother's future:
My grandmother is in her 80s and lives quite independently in her flat. He is a little forgetful but not alarmingly so, and is physically well for her age.
She has two children, and her will stipulates that the flat is to be sold and shared between them on her death. I, her only grandchild, am set to gain some of her other wealth (modest savings etc).
My mother said she was considering asking my grandmother to transfer her house into hers and her son's name to avoid potential nursing home costs in the future, while allowing her to live there for as long as she wants to.
I am quite uncomfortable about this. I believe local authorities are allowed to go back as far as they like when investigating deliberate deprivation of assets. My mother is also married. If that somehow didn't work out, I believe her husband would have a claim on her flat.
I find the whole thing morally and legally dubious. Am I right to feel this way? Thanks in advance for your advice.
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Comments
But lets face it you can't cover every eventuality - you can only make the best decision on what is at this time.
The local council will check the records and find out the home belonged originally to your gran - and they can legally place a charge on the flat via her estate once she passes on. So your family won't avoid the care fees - particularly as your gran is in her 80s so is likely to need care soon.
Let alone the capital gains tax issues - or as you say the claim your mum/uncle's spouses would have on the property in the event of a divorce.
And of course your nan may live to 100 and never need social care!
PS If it was that easy - everyone would be doing it!:D
http://www.inheritancesolutions.co.uk/articles/is-it-wise-to-transfer-my-house-to-my-children.html
I thought the transfer time was 7 years for tax.
The simplest way to transfer the liabillity is to buy a small flat that can be sacrificed and the relatives buy the house. It is advisable the relitives take a 80% mortgage initially and pay chunks off over a few years.
That way the sticky beaks can see a small flat of which most will be exempt under the 2017 rules.
£250 rule: you can give gifts of upto £250 to any one tax free.
I was thinking of setting up a £250 club of people wanting to avoid inheritance tax. So If you have over £325k (or £650K as a couple) of assetts we all add eachother to a list. If any of us die any part of the estate over £650k gets given as a gift before inheritance tax to the £250 club.
I might just write it in my will to donate £250 to every person in my email address book to stuff the tax man
though it can be protected if done correctly.
http://www.ageuk.org.uk/home-and-care/care-homes/deprivation-of-assets-in-the-means-test-for-care-home-provision/
I would really worry about this too.
If I were in your position I'd seek legal advice.
Re care home costs, aren't the government changing it so elderly home owners are treated more fairly/aren't forced to sell their homes to fund care? Am sure I saw something about it yesterday in the news.
The government is going to cap how much it gets from people to about 75k per person which for a lot of people still means they have to sell the property anyway either on death or going into care
No one can be forced to sell a home to fund care while they are still alive.
An individual is perfectly entitled to hold on to their assets whilst in care. After they have died a charge can then be put against the esate for the fees.But there is no legal obligation for someone to sell a home to fund care in their lifetime.
Cases where this has occured have been where the local authority have acted outside of their reach, or family/relatives have misunderstood the law.
It's perfectlyacceptable for the owner of a property to rent their home out to help fund care costs during their lifetime.
It would be far better for the OP's granmother to look give power of attorney to her heirs so that they can manage her assests effectively should she need help in doing so.
I don't know if this is the same across the board but certainly where I am if a person goes into care/sheltered housing/similar they can have savings of up to £16k before having to pay for their care/services.
Owning your own home limits what you get for free but then health/conditions play a part in things, too. They can go into care/housing whilst owning a house and get "X" months grace from paying whilst their house is sold.
That's the absolute basic gist of it. I've just had a close family member go into care so have had to deal with some stuff along these lines.
We looked into signing the house over but it would've been too late to have done it now. Can't remember the exact details of that bit as we looked at it 12 months ago and it was quickly shot down as there wasn't any point to it.
However as with care homes, if you "give it away" but keep an interest in it such as living in the house then they completely ignore the transaction even if it was over seven years ago and tax you on it anyway.
But the house does not have to be sold in the owners lifetime, there is no compulsion to do so in law.
All local authorities should offer the 'deferred payment scheme' - this can give the owner of the property the option to rent the home to raise funds to pay fees.
The local authority then recoups any debt once the property is sold after the resident dies.
My Mother transfered her house to me many years before she needed to go into a home - this had no effect on who paid for her care as she didn't get rid of enough other assets.
I was monumentally pissed off at the treatment she had in the last year of her life - only people who helped without question or asking for cash were the local social services who provided all sorts of equipment and couldn't have been more helpful.
Everyone else wanted to know how much she was worth before submitting appropriate bills.
Hospital managed to discharge her when she couldn't walk and was suffering from advanced Dementia.
For a long time I'd taken care of her - carry to toilet etc - but when she couldn't walk it became impossible - I'd already got power of attorney and had 'that' meeting with the council about getting her proper care in a home - again as she hadn't been profligate enough with her cash the quick answer was sort it out yourself.
I did and she went to a nice place I chose where I could visit her daily.
Beware if the council fund the care where might you end up ??
I have nobody to look after my care in old age and having seen the the quality of life when you can no longer look after yourself
...I won't be bothering.
I think (belatedly) quality of life while you can enjoy it is more important than an extended existence drooling and bedwetting.