You cannot be serious!

[kenbro]

Family friend called in this morning and in general chat informed us of of a close friend who’s mother gave her house to her children nearly 10 years (Circa 2014) ago. (My mother did the same in 1989.)
Forward to today and the Lady in question needs to go into a care home.
Guess what?
Some Govmint dept (Not sure which) is challenging the children for the proceeds of the house sale all that time ago!
They are doing this on the grounds that the lady gave the house away so she could benefit later.
I think most people know you can give away your possessions and if you live for another 7 years there are no penalties.
Never heard of this one before. Has anyone else?
Some people need to rethink what they might be thinking of doing.

Starmer should be ashamed if he can’t think of something better to raise money than robbing pensioners and people that scrimp to send their children to private schools.
Ken.
Ps. Just heard the new definition of URGENT.
Friend just been told he needs urgent heart operation (New valve in Aorta?) and when asked when to prepare….12 months!
They do say, Life’s poop and then you die.

 

[Dalua]

I think most people know you can give away your possessions and if you live for another 7 years there are no penalties.

I think that applies to death duties - which again applies only if you die. I'd have assumed that for other purposes, if you give something away it is from that moment no longer yours, but the property of the recipient of the gift.
Not sure who 'they' are in this case - but do the children still own the house which the old lady gave them and live in it , or let it? Or did they sell it and keep the money? or did the old lady sell the house and give them the money?
Whichever, it seems odd that a 'they' is able to try to get the value of the gift back - even if the gift had been made yesterday.

I'm interested to know the basis for this in law.

 

[Essex stalker]

Family friend called in this morning and in general chat informed us of of a close friend who’s mother gave her house to her children nearly 10 years (Circa 2014) ago. (My mother did the same in 1989.)
Forward to today and the Lady in question needs to go into a care home.
Guess what?
Some Govmint dept (Not sure which) is challenging the children for the proceeds of the house sale all that time ago!
They are doing this on the grounds that the lady gave the house away so she could benefit later.
I think most people know you can give away your possessions and if you live for another 7 years there are no penalties.
Never heard of this one before. Has anyone else?
Some people need to rethink what they might be thinking of doing.

Starmer should be ashamed if he can’t think of something better to raise money than robbing pensioners and people that scrimp to send their children to private schools.
Ken.
Ps. Just heard the new definition of URGENT.
Friend just been told he needs urgent heart operation (New valve in Aorta?) and when asked when to prepare….12 months!
They do say, Life’s poop and then you die.

One thing you need to be very careful of is giving your house to your children and then to remain living in the house. As far as HMRC are concerned you no longer own the house however you are gaining a benefit of living rent free in it. They are quite likely to want to recover tax on the amount of benefit that you have received. i.e. the amount of rent that you would of had top pay to live in a house of similar size etc.
This can be an issue of you have purchased rental properties with a view of using the rental income for your pension. You are caught between a rock and a hard place in that if you keep the houses so that you receive the rental income then they would be subject to Inheritance tax when you die, if you put them in trust with a view to avoiding inheritance tax then you can no longer take the rental income as the house isn't owned by you. The rental income has to go to the trust.

 

[FISH BOY]

Believe there are certain rules when gifting a house to your children.

Quick google.

 

[kenbro]

I think that applies to death duties - which again applies only if you die. I'd have assumed that for other purposes, if you give something away it is from that moment no longer yours, but the property of the recipient of the gift.
Not sure who 'they' are in this case - but do the children still own the house which the old lady gave them and live in it , or let it? Or did they sell it and keep the money? or did the old lady sell the house and give them the money?
Whichever, it seems odd that a 'they' is able to try to get the value of the gift back - even if the gift had been made yesterday.

I'm interested to know the basis for this in law.

I had thought the idea of giving away your property was to save on capitals gains tax and nothing more.
My own MIL has recently gone into care and currently pays over 1K per week.
She has assets to keep her paying for several years, but being 95 that might not happen.
Someone else we know has been in a very expensive care home for over 5 years. She wakes each day to the sound of the local church which she can see from her room window, she also has views across open countryside.
If her money runs out before she does her family will have to take responsibility or she will have to move out.

I too am interested in this and will see what more I can find out.
Ken.

 

[Bo Diddley]

The rental income has to go to the trust.

Yes, and if the trust is in your name as in Fred Bloggs Trust Fund, so long as everything you purchase is invoiced as the Fred Bloggs Trust Fund and everything you sell belonging to the trust goes back into that fund you are quite safe, you need the paper trail out & in... but it can cause problems when you die apparently... a mate put a large sum into a trust fund when he had a payout from a motorcycle accident... then when he had another one ten years later his wife & solicitors had one hell of a job getting things sorted.

 

[Selous]

One thing you need to be very careful of is giving your house to your children and then to remain living in the house. As far as HMRC are concerned you no longer own the house however you are gaining a benefit of living rent free in it. They are quite likely to want to recover tax on the amount of benefit that you have received. i.e. the amount of rent that you would of had top pay to live in a house of similar size etc.
This can be an issue of you have purchased rental properties with a view of using the rental income for your pension. You are caught between a rock and a hard place in that if you keep the houses so that you receive the rental income then they would be subject to Inheritance tax when you die, if you put them in trust with a view to avoiding inheritance tax then you can no longer take the rental income as the house isn't owned by you. The rental income has to go to the trust.

But surely the trust could loan you money from the trust to do with what you will?

 

[Pelyma]

You are confusing several processes here; to avoid IHT you can make a gift (a potentially exempt transfer) and provided you live 7 years and you retain no benefit further from the gift it is outside of your estate. If in this case the lady has remained in the house and not paid a full market rate it is a Gift with Reservation of Benefit and no IHT advantage is gained. If the lady in question was gifting the house so she didn't have to pay for care fees then she is intentionally depriving herself of an asset; there is no time scale for this and as she is finding out the local authority will see the children for the costs. If a solicitor set this up then I suggest the family goes back to them as this was never going to work.

 

[Essex stalker]

But surely the trust could loan you money from the trust to do with what you will?

I'm no tax expert, I pay others to do that however I believe that the trustees of the estate have to satisfy themselves that the person they lend trust money to has to be in a position top be able to repay that loan. depending on the type of trust I think taking a loan from the trust can affect IHT

I sat in a meeting with our solicitor and accountants a couple of years ago to try and sort all this out, the one thing I realised at the end of the meeting is that its a very complicated and there are numerous pitfalls that can leave your kids exposed to very large tax bills

 

[devon deer stalker]

As above, 'deprivation of assets' you will be liable for care home fees.

By the way...my father was part funded, but there was a difference between what the local authority paid and what the home wanted, myself and brothers were told we needed to find extra.....I went back to the home ...haggled...and in the end didn't pay any extra.....so haggle!

 

[Sinistral]

Family friend called in this morning and in general chat informed us of of a close friend who’s mother gave her house to her children nearly 10 years (Circa 2014) ago. (My mother did the same in 1989.)
Forward to today and the Lady in question needs to go into a care home.
Guess what?
Some Govmint dept (Not sure which) is challenging the children for the proceeds of the house sale all that time ago!
They are doing this on the grounds that the lady gave the house away so she could benefit later.
I think most people know you can give away your possessions and if you live for another 7 years there are no penalties.
Never heard of this one before. Has anyone else?
Some people need to rethink what they might be thinking of doing.

Starmer should be ashamed if he can’t think of something better to raise money than robbing pensioners and people that scrimp to send their children to private schools.
Ken.
.

Ken, I'm sure that care costs are the responsibility of the local authority social services department, rather than a government agency.
This isn't HMRC at work. Our views on means-testing the WFP & charging VAT on private school fees differ totally, but let's leave it there.

https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs40_deprivation_of_assets_in_social_care_fcs.pdf

 

[Foxyboy43]

Nursing Home-related “Deprivation of Assets” calculations can go back as far as the local authority wishes but generally six years is the norm - decisions can be challenged/negotiated but best to avoid being in that position by informed advance planning.

 

[Pete6.5]

I'm going to be controversial here but why shouldn't someone be liable for their care costs when they are old. Isn't that why when we are younger we save money for. It has to be paid by someone so it's either us as tax payers or the old person themselves.

 

[Pelyma]

What about if you have dementia, it is an illness, if you have just about any other condition the NHS cares for you.

 

[shakey jake]

I dont want to be liable for any ones care but my own. Why should i pay for your mum/dads care so you can get inheritence?
I accept the system is broken and care homes charge a hideous amount but kids could step up and give up their life to care and save a few quid

 

[Pete6.5]

What about if you have dementia, it is an illness, if you have just about any other condition the NHS cares for you.

It's a very difficult decision but there has to be a line somewhere between free NHS care and just reducing the bill to the family so they can inherit as much as possible.

 

[starr shot]

It's a very difficult decision but there has to be a line somewhere between free NHS care and just reducing the bill to the family so they can inherit as much as possible.

Here’s a different look on it, a neighbor of mine was telling me about his experience when his parents who had saved,invested,bought their own home etc So they could pass something on to their own children/ Grandchildren.Then to lose it when one parent died and the other had to go into a care home.Compared to his mate’s parents who holidayed where ever they wanted partied and lived like there was no tomorrow,Only to end up in the same care home as his parent but payed for by the NHS.

 

[Yorkie]

Here’s a different look on it, a neighbor of mine was telling me about his experience when his parents who had saved,invested,bought their own home etc So they could pass something on to their own children/ Grandchildren.Then to lose it when one parent died and the other had to go into a care home.Compared to his mate’s parents who holidayed where ever they wanted partied and lived like there was no tomorrow,Only to end up in the same care home as his parent but payed for by the NHS.

You hit the nail on the head.
I have come to the conclusion that there are two ways of retiring financially.

1. Have absolutely pots of money. So much cash that nothing would ever constitute a problem.

2. Have absolutely F*** all.

If you are one of the many that have bought a modest house, paid into a modest pension and have some modest savings. Well, you will have your pants pulled down all the way to your ankles.

 

[Camdig]

I'd be happy to subsidies the older generation in the last few years of their life's the majority will have earned it in taxes anyway.
I do have a problem subsidising more than capable young people claiming every possible benefit, I also have major issues with illegal immigrants getting better care than are old folks.
System is broken but it isn't the fault of our pensioners

 

[Stalker62]

System is broken but it isn't the fault of our pensioners