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Giving your property away
| | SHOULD YOU GIVE YOUR PROPERTY AWAY IN YOUR LIFETIME?
Many people are worried about paying inheritance tax or having to pay for a nursing home. They want to give money or property perhaps to their children or grandchildren in the hope that future tax or liability to pay for a nursing home would be avoided. Once given away, however, you cannot insist on having the money or property back if your circumstances change or things turn out differently from what you imagined.
There are many pros and cons to be considered before you take the very serious and irreversible step of giving your home or money away.
A lifetime gift of property might be subject to different taxes such as Capital Gains tax. If you reserve a right to live in the property then the gift would not be effective for Inheritance Tax purposes. Even if it is, you would have to survive for seven years to avoid the Inheritance Tax completely.
There are also lots of other pitfalls which you should consider, such as:
1. If you give the house to your children, without reserving a legal right to live there, they could decide to sell it over your head even if you wish to live there, or refuse to pay your Nursing Home fees which you could otherwise have afforded.
2. Your own children to whom you gave the property or money might die before you and the beneficiaries of their estates might then have the say as to whether they allow you to stay in the house or whether to pay for your Nursing Home fees.
3. Your own children might become involved in divorce proceedings and your property and money might become part of the divorce settlement and benefit your ex son or daughter in law.
4. Your own children might go bankrupt and your property and money would then be dealt with by the Trustee in Bankruptcy for the benefit of the creditors, not you.
5. If the Benefits Agency conclude that you gave your property or money away to avoid paying Nursing Home fees (usually they can do this when the gift was made within 6 months of going into a Nursing Home) then they can treat you as if you still owned the property or had the money and refuse to pay your Nursing Home fees until the value or your property or money would have been exhausted. This would obviously be disastrous for you if your family who had been given the assets then refused to pay your Home Fees or lost the money in other ways, such as those outlined above. |
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