what are the rules concerning a person changing the name on their house deeds, then needing to go into care 2years later
signing over a house
- Thread starter carole robson
- Start date
If you already have a diagnosis and are anticipating a need to go into care, this would probably be classed as deprivation of assets with the aim of dodging care costs. Get legal advice if you really want to try it.
Related discussion:
Putting house into 'Trust'
http://forum.alzheimers.org.uk/showthread.php?47959-Putting-house-into-Trust
and read up the factsheets -
Financial and legal affairs
http://www.alzheimers.org.uk/site/scripts/documents_info.php?documentID=160
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Doing it post diagnosis will probably mean you wasting money on legal fees for something that could be overturned.
jay
jay
"Signing over" property in this fashion - in other words, giving it away, is fraught with problems. Espescially if the original owner remains living in it, or the new owners do not live there, do not pay the bills or do not require the original owner to pay a full market rent.
Giving away property like this is regard to moving into a care home, is likely to be treated as a Deprivation of Asset. This means the deliberate giving away of assets so that they cannot be used to pay care fees. It would include giving away property, valuable items, substantial fractions of cash assets and so on or spending in unusuall ways, such as buying lavish gifts or luxury holidays.
There is no limit as to how far back the local authority can look into someone's financial history to establish a Deprivation of Asset. However, they do have to show there was intent. So gifts given a long time ago when the owner was healthy and could not "reasonably expect" to enter residential care in "the forseeable future" might be OK. However, gifts given if the owner has bene diagnosed with a progressive illness that very often produces an eventual need for residential care would be far more risky as it would be much easier to demonstrate an intent to avoid care fees.
If a Deprivation of Asset is established, then the local authority treat the original owner as if they still owned what was given away in the financial assessment, and they can take legal action to recover it - or it's monetary value - from whoever it was given to.
Giving away property that one still lives in also has implications for Inheritance Tax purposes. In this case, it is called a Gift With Reservation of Benefit and - unless, say, the new owners charge the original owner full market rent for living in the property - then the property is treated as though it were still part of the original owner's estate when they die. Such gifts also require the executor of said estate to complete the full Inheritance Tax return which is a multi-page nightmare (I know, I had to do one) rather than the simplified version available for simple, relatively small estates.
In short I would suggest "signing over" property is unwise and at the very least merits the advice of a solicitor who specialises in the rules regarding care fees and Inheritance Tax.
You couold end up paying a lot of money for alteration of deeds etc which would be worse than useless.
Giving away property like this is regard to moving into a care home, is likely to be treated as a Deprivation of Asset. This means the deliberate giving away of assets so that they cannot be used to pay care fees. It would include giving away property, valuable items, substantial fractions of cash assets and so on or spending in unusuall ways, such as buying lavish gifts or luxury holidays.
There is no limit as to how far back the local authority can look into someone's financial history to establish a Deprivation of Asset. However, they do have to show there was intent. So gifts given a long time ago when the owner was healthy and could not "reasonably expect" to enter residential care in "the forseeable future" might be OK. However, gifts given if the owner has bene diagnosed with a progressive illness that very often produces an eventual need for residential care would be far more risky as it would be much easier to demonstrate an intent to avoid care fees.
If a Deprivation of Asset is established, then the local authority treat the original owner as if they still owned what was given away in the financial assessment, and they can take legal action to recover it - or it's monetary value - from whoever it was given to.
Giving away property that one still lives in also has implications for Inheritance Tax purposes. In this case, it is called a Gift With Reservation of Benefit and - unless, say, the new owners charge the original owner full market rent for living in the property - then the property is treated as though it were still part of the original owner's estate when they die. Such gifts also require the executor of said estate to complete the full Inheritance Tax return which is a multi-page nightmare (I know, I had to do one) rather than the simplified version available for simple, relatively small estates.
In short I would suggest "signing over" property is unwise and at the very least merits the advice of a solicitor who specialises in the rules regarding care fees and Inheritance Tax.
You couold end up paying a lot of money for alteration of deeds etc which would be worse than useless.
My neighbours did this in 2002 and then the tax law was changed retrospectively. It's caused them many many sleepless nights and they are now living in a bungalow owned by their DIL, who they don't get on with. If their son, who isn't well himself, goes before them, then I dread the potential fall-out.
The property has been sitting empty for nearly six months because the trustees (the family members) can't agree what to do with it and it's led to a lot of unpleasantness.
All that distress whilst they're alive just to save paying tax when they're dead.
FIL took out an equity loan on their house before he died and the bill gets bigger with every year. Recently BIL arranged a meeting with his financial advisor and us to discuss what could be done about this.
The financial advisor was very clear that if we bought the house (BIL's plan) it could be construed as deprivation of assets when, as seems likely, MIL needs residential care and we could all be in very serious trouble.
The financial advisor was very clear that if we bought the house (BIL's plan) it could be construed as deprivation of assets when, as seems likely, MIL needs residential care and we could all be in very serious trouble.
The Gift With Reservation of Benefit rules were brought in long before 2002 - they were, as far as I'm aware, brough in during 1986. This is why gifts made before March 18 1986 are exempt - generally speaking, changes in tax law are rarely retrospective, because of the deeply unfair nature of doing so. Giving away property before the change was perfectly legal tax planning (although it might be considered ethically questionable)
I assume then that your neighbours were more likely to have placed their property in a trust (there would be no IHT benefit of their making an outright gift in 2002). And yes, the rules regarding trusts were changed and even worse the changes were retrospective. A greatmany people were faced with either annual bills, a large IHT bill or large legal fees in undoing previously created trusts. I seem to recall it was under the banner of "Pre-Owned Assets"
Yep, POAT, that's the one, Nebiroth. They've spend thousands and thousands trying to undo the trust - unsuccessfully to date. It's been a disaster; when they needed to downsize due to ill-health, they had no house to sell and were at the mercy of their children, one of whom fortunately had the wherewithall to buy another property for them to live in. But it's in his wife's name and it's not a happy relationship between her and my neighbours.
The stupid thing is that their children and grandchildren are all well enough off themselves and will happily spend the assets that their parents/grandparents handed over. It's been an object lesson in what not to do, I can tell you. Money certainly hasn't bought them happiness.
I am more determined than ever that my children will get what's left after my OH and I have been taken care of, but I'm not going to hand assets over prematurely.
The stupid thing is that their children and grandchildren are all well enough off themselves and will happily spend the assets that their parents/grandparents handed over. It's been an object lesson in what not to do, I can tell you. Money certainly hasn't bought them happiness.
I am more determined than ever that my children will get what's left after my OH and I have been taken care of, but I'm not going to hand assets over prematurely.
thanx for your reply, but now i am scared. This was not done for the reason you suggest.
The problem will be how it is viewed by the local authority. As I have said, they do have to establish intent; so if the gift was given many years ago when the owner was healthy, this can be difficult. However, if the gift is done when the owner has been diagnosed with a progressive disease, such as dementia, which frequently leads to a need for residential care - then it becomes much easier for the local authority to argue that the owner gave away an asset knowing that they were in poor health and could "reasonably expect" to need residential care.
There is no absolute answer; it depends on a judgement made by the local authority and their willingness to persue the matter.
If you are able to show that the gift was made for sound reasons at the time - for example, as part of tax planning - then this is in your favour.
If the original owner is now likely to require residential care and a financial assessment is imminent, I can only suggest taking professional advice.
There is no absolute answer; it depends on a judgement made by the local authority and their willingness to persue the matter.
If you are able to show that the gift was made for sound reasons at the time - for example, as part of tax planning - then this is in your favour.
If the original owner is now likely to require residential care and a financial assessment is imminent, I can only suggest taking professional advice.
i think i have problem
Three years ago my dad died, so sad. Mum was having memory problems, under care from memory clinic - mild cognetive impairment was diagnosed. Mum met a man, who i thought she may marry. Mum transferred ownership of her house (through a solicitor) who actually said - this is good you will not have to pay for CH. One year later, mum was diagnosed with AZ, and may need to go into a CH> Where do we stand on legalities of funding etc.
Three years ago my dad died, so sad. Mum was having memory problems, under care from memory clinic - mild cognetive impairment was diagnosed. Mum met a man, who i thought she may marry. Mum transferred ownership of her house (through a solicitor) who actually said - this is good you will not have to pay for CH. One year later, mum was diagnosed with AZ, and may need to go into a CH> Where do we stand on legalities of funding etc.
Hi Carole,
Can I ask who the house was transferred to? Was it transferred to you or to the man your mum had met? Why was the house transferred, was it to avoid care home fees, or was there another reason?
Sorry for all the questions, but I just want to understand what sort of problem you might be facing.
Edited to add: I've just found the answers on your other thread and have merged the two threads.
I do thin that if at the time of the transfer your mum had not been diagnosed with dementia (or anything else that made it more likely she would need care in the future) and that her motivation was to avoid her husband-to-be from making a claim on the house, then you do have an arguable case. I would go back to the solicitor who acted on the transfer as s/he should have a file note as to your mum's reasons for transferring the house at that time.
Can I ask who the house was transferred to? Was it transferred to you or to the man your mum had met? Why was the house transferred, was it to avoid care home fees, or was there another reason?
Sorry for all the questions, but I just want to understand what sort of problem you might be facing.
Edited to add: I've just found the answers on your other thread and have merged the two threads.
I do thin that if at the time of the transfer your mum had not been diagnosed with dementia (or anything else that made it more likely she would need care in the future) and that her motivation was to avoid her husband-to-be from making a claim on the house, then you do have an arguable case. I would go back to the solicitor who acted on the transfer as s/he should have a file note as to your mum's reasons for transferring the house at that time.
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sorry to high jack this thread but I keep wondering about a sort of similar situation.
My brother bought mum's council house in her name on the "right to buy scheme" this was done approx 8yrs ago. Mum never paid the mortgage on the house and my brother has a paper trail to prove this. The deeds were transfered to my brother's name 6-9mths ago (he is over 60 and still living in the house). Mum moved to permanent residential care 4 wks ago.
My brother's solicitor friend says they will not call this deprevation, as the house was basically his anyway.
Any thoughts ??
My brother bought mum's council house in her name on the "right to buy scheme" this was done approx 8yrs ago. Mum never paid the mortgage on the house and my brother has a paper trail to prove this. The deeds were transfered to my brother's name 6-9mths ago (he is over 60 and still living in the house). Mum moved to permanent residential care 4 wks ago.
My brother's solicitor friend says they will not call this deprevation, as the house was basically his anyway.
Any thoughts ??
Since he's over 60 and living in the house, even if the house was in your mother's name, he would still be OK: a property occupied by an adult relative of over 60 is disregarded.
Hi Jess,
Aside from the fact that your brother has paid towards the house, if he is living in the house and is over 60 then the house will be disregarded in any event.
See this factsheet on When does the local authority pay for care. This is an extract:
Aside from the fact that your brother has paid towards the house, if he is living in the house and is over 60 then the house will be disregarded in any event.
See this factsheet on When does the local authority pay for care. This is an extract:
Hello
I am looking for more clarification regarding the issue of a relative aged over 60 and living in a property meaning it can be disregarded, as mentioned above.
My mother who suffers from Alzheimers had a fall and broke her hip and wrist recently and on leaving hospital has gone into a care home (and wonderful they are too!).
My question is, if the relative in question had to be living in the property prior to a person going into a care home?
I am 62 years old and am currently living in rented accomodation as I do not own any property of my own. If I were to give up my rented property and move into my mother's house now, does the "disregard rule" still apply?
Many thanks in advance
Philip
I am looking for more clarification regarding the issue of a relative aged over 60 and living in a property meaning it can be disregarded, as mentioned above.
My mother who suffers from Alzheimers had a fall and broke her hip and wrist recently and on leaving hospital has gone into a care home (and wonderful they are too!).
My question is, if the relative in question had to be living in the property prior to a person going into a care home?
I am 62 years old and am currently living in rented accomodation as I do not own any property of my own. If I were to give up my rented property and move into my mother's house now, does the "disregard rule" still apply?
Many thanks in advance
Philip
Hello Philmy and welcome to talking point I am sure you have to lived in the house as your home before they can allow you to stay in it if your relative goes into care , I might be wrong i hope some other people might be able to answer you better but i thought I would bump this up to the top again so other people will see it and might know more than me,
best wishes Jeany x
best wishes Jeany x
It's not specifically addressed in CRAG but I'm not sure it has to be: if you weren't living there before she went into care then you weren't resident so the house is not a disregarded asset. I suspect that it all comes down to where you were ordinarily resident and there are specific things that have to have occurred to establish residence (it's not time based, but would involve such things as changing your address for official purposes and re registering with a GP).
Was wondering about a few things myself, but no idea what to do?
My situation is different mum lives with me but we co own the house, the social worker is pushing for mum to go into a care home which i don't agree with and of course i have said no, i have asked mum and she says no. I had thought about getting her to sign over her half of the house to me, but i think it is too late for that even though she would be able to tell the solicitor why she wants it done.
My situation is different mum lives with me but we co own the house, the social worker is pushing for mum to go into a care home which i don't agree with and of course i have said no, i have asked mum and she says no. I had thought about getting her to sign over her half of the house to me, but i think it is too late for that even though she would be able to tell the solicitor why she wants it done.
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