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How do you sign your house over to your kids?

Discussion in 'Personal' started by buntycat, Aug 4, 2009.

  1. Hello
    I have had a chat with mum and dad about their finances and they are pretty keen to sign their house over to my sister and I, just in case either of them needs to go into a home in the future and have to sell their house to cover the costs. They are both in good health now and have shown no indication that they might need residential care in the forseeable future.
    I was wondering how this is done, whether they have to "pay" us "rent" to demonstrate our ownership and whether there are any other points to consider. One point is that my husband and I already own a house (we don't live in it), so if I had two homes in my name and my husband and I decided to sell up, we'd be liable for capital gains tax. Could we sign the mum and dad's house to my sister while we sell and then sign it back to joint names afterwards?
     
  2. Hello
    I have had a chat with mum and dad about their finances and they are pretty keen to sign their house over to my sister and I, just in case either of them needs to go into a home in the future and have to sell their house to cover the costs. They are both in good health now and have shown no indication that they might need residential care in the forseeable future.
    I was wondering how this is done, whether they have to "pay" us "rent" to demonstrate our ownership and whether there are any other points to consider. One point is that my husband and I already own a house (we don't live in it), so if I had two homes in my name and my husband and I decided to sell up, we'd be liable for capital gains tax. Could we sign the mum and dad's house to my sister while we sell and then sign it back to joint names afterwards?
     
  3. SleighBelle

    SleighBelle Occasional commenter

    Hello Bunty, I'm afraid I can't help you with the legalities and procedure, but my Grandparents have signed over their house to all three of their children, my Dad, Uncle and Aunt co-own the family home and my parents pay them each a VERY nominal figure in rent each year. I think it's something silly like £1.
    It seems like it's becoming a popular option for many elderly folk, so I'm sure someone else on here knows more than I.
     
  4. YOY

    YOY

    My limited understanding is that unless they are paying market rent it is still classed as their asset, and they will need to use the equity to finance care should it become necessary they can't just give their wealth away to avoid fees or to qualify for benefits. I'd suggest posting on the Motley Fool forums for more expert views - that's where I've read about it.
     
  5. harsh-but-fair

    harsh-but-fair Senior commenter

    i think you are right there, yoy
     
  6. I agree - having just spent a bit of time on google and age concern. It seems that transferring your house does not work. It counts as deliberately depriving yourself in order to gain assistance from the state.
    The Age Concern website is particularly good; there are quite a few easy to understand factsheets. I did not realise that even extravagant living and expensive holidays can count as "deliberate deprivation".
    I do have another question: they are also the main beneficiaries of a will, made by a person who died intestate, so the money was not left to them specifically. They don't want the money (quite a bit) and are giving almost all of it away. I am wondering if this would count as "deliberate deprivation".
     
  7. harsh-but-fair

    harsh-but-fair Senior commenter

    eh?
     
  8. The person died without a will and they are next of kin, so it all goes to them by probate.
     
  9. We looked into this someears ago and didn't do it (that is, my parents didn't sign the house over). There are many complications.
    First of all your parents must both survive you by 7 years to avoid taxation.
    Secondly you need to make provision for your parents in the unlikely situation of you and your siblings pre-deceasing your parents.
    Thirdly, and this is the most likely scenario, test cases in court have succeeded when local authorities have taken people to court to gain access to the money in the property to pay for care home fees, even when the house was signed over well before the person in question needed to go into a home. In the eyes of the law if a home is signed over and in later years the previous owner (now 'tenant') has to pay for care home fees it is considered the asset has been signed over in avoidance of care home fees.
    It's not fair. If you have worked hard all your life, claimed no benefits, paid all your taxes and own your home you are basically f c u k e d when YOU need help.
    If you are a scrounger, on benefits, live in rented, don't work or own a home then the starte will look after you in you hour of need.
    Sorry not not to be any more positive Bunty but I've spent far too long researching all ways of avoiding this and it just isn't possible.
    My father is now in a home with Alzheimers. If he were sectioned then he would go to a psychiatric unit and no fees would be due. He can be sectioned if he is violent. He is violent and needs constant sedation and supervision. However, if they send him to a psychiatric unit they will sedate him more and send him back to the home. Why? Because if he is in a home they can put a charge on my mother's house. Simple. She worries day and night, not only about the bill which will need paying when she passes away, even if it is larger than his half of the property, but she worries he will genuinely hurt an elderly person at the home. Yet no-one has the power to do anything about it.
    It stinks!

     
  10. catmother

    catmother Lead commenter

    I assume that the OP means beneficiaries of an estate. As for the original question,even if it was legally allowed it seems to me to be a total minefield.
     
  11. That's a terrible story, altarego. I was not sure if you know this from your post, but your mum and dad's capital does indeed go towards the cost, until there is about 23K left, which they are allowed to keep, so I hope your mum realises that there will still be something left, even if the entire bill for your dad;s care exceeds the cost of his house. I am also pretty sure that they can't kick her out.
    There are some terrible stories; emmapax's brother has lived with their mum all his adult life and been her carer. Now she has deteriorated and needs residential care, he is being KICKED OUT OF HIS OWN HOME because he is not on the deeds, so that he can be sold to pay for care.
    I know what you mean - there was a really long and good thread about care home cost on Opinion a couple of weeks ago. There seems very little point in buying your own home, especially if you live in social housing. Council houses get free boilers, fitted kitchens, double glazing, new bathrooms and roofs, while people who bought their council house are mugs. In fact, worse than mugs. Mum and dad even have to pay when the outside drain gets blocked up with nappies. Then once they've lived in their own home for a couple of decades, it goes back to the state.
     
  12. TBH Why is it not fair? Who is supposed to pay the £2k per month (or whatever)? If you have worked hard all your life and have £2 million invested, should you be able to keep that too or have someone else pay?
    Have you considered why you shoul pay to look after other people's parent so their children can have their money?
     
  13. Thanks Bunty. Yes, Mum does know they can't kick her out. It used to be that they could force a sale on the property but now they hold fire until the living partner passes away soMum is safe.
    It bugs me though because when dad went into the home mum moved to be nearer me and to get a smaller, easier to maintain property. She had about £35K left over after buying the house and paying for a conservatory and a few other bits and bobs. The council then said ALL of the
    £35K was dad's AND he had a half share in the house. What utter nonsense! OK, if they want to declare the money all his then his share of the house is less than 50%. They just won't listen!
    So depressing!
    What's more dad has no quality of life. He merely exists in a drug induced stupor becasue the local authority won't section him lest they lose out on any money! Barstewards! [​IMG]
     
  14. If he had cancer, or a stroke, or any other medical condition his care would be paid for. Local authorities do not consider alzheimers a medical condition. They consider his needs as social. It is wrong. Alzheimer's is a disease. It is a disease that eats away at his brain making him incapable of looking after himself. If he were incapable of looking after himself following a stroke his care would be paid for. Eventually, alzheiners will eat away at the areas of the brain controlling heart and lung function. He will lapse into a coma and die.
    Maybe...meanaveragejoe....maybe you and yours will be spared this living death.
     
  15. joli2

    joli2 New commenter

    To be fair alterego, MAJ's coment read as more general than you've taken it. Your response is (understandably) emotional, but unfair on him, IMO.
     
  16. That's hard, altarego - ALL of the money is his????!!!! that's shocking. I am no lawyer, but it might, just might, be worth dropping a line to Age Concern - there must be some legal precedent that would confirm whether this is right.
    As for you, mean average Joe - you are always polite, so I will try to be polite back. Whjy should my mum and dad pay fro something that their contemporaries get for free? I am assuming that you earn a good wage. how would you feel if all of a sudden you had to PAY for your kid's/kids' prescriptions/dental treatment and NHS care on the basis that you can afford it. You'd be steaming. (Don't try any altruistic mumbo jumbo on me - you'd be bloody steaming)
    As soemone said on Opinion: why should your savings and home be seen as a resource to be used by the state?
    What's the point of grafting for nowt?
     
  17. Altar - I did not realise that if you have a stroke/cancer etc, your care is paid for. Does it count as NHS "Continuing Care?"
     
  18. True Joli but if he had read my posts he'd have seen my dad has alzheimeres and the extent to which the local authority will go to to avoid payting for any of his care. He is a strong maninspite of his illness and the folk in the home are all elderly and frail, He has a particular thing about the elderly ladies and if he hit one on the stairs she would no doubt fall, maybe fatally. This is why the home and my mother are trying to get him into a psychiatric unit. I'm sure if she had to pay there as well he'd have been there a long time ago.
    I agree if you have millions then fair enough, pay, but my parents have little except their house and would like to leave something, not to me but to their grandchildren who face a future with huge uni debt and god knows what else.
    Perhaps the threshold for contribution should be raised but whatever the situation, alzheimers should be in the same category as strokes.
     
  19. Indeed Bunty. It is my parents' tax money, and yours, that pays for all the benefits of the scroungers and THEIR care home fees vwhen they need it.
     
  20. I am not sure what it means for them apart from the 7 year rule BUT
    1. If you get into debt or siblings get into debt they will take the house anyway and your parents will homeless because of your debt, likewise husbands wives of siblings could stake a claim if you go divorced and claim it as part of your assets.
    What you could do is each buy a share of the house (say 25% each) so you and your brother/sister each own a quarter but your parents still own 50% of their own home. Then after their days you will inherit the other 50 % between you (another 25%). This means that if one of you want to move into the house, you only need to find 50% as you already own 50%.
     

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